"I’ve used the Legalo shareholders agreement with a variety of clients who need to get something down on paper at the start of their business, as a cost effective route to good governance. It’s a simple process, backed up with appropriate advice if you need it.”
– Nick Forsyth, partner, Lambert Chapman AccountantsThis template Shareholders Agreement is great for use in the UK by:
This is one of our best-selling templates, with over 100 sold!
A shareholder agreement sets out the rights and duties of each shareholder. It is an essential contract to put in place when a company has more than one shareholder. Whether you have a start-up or an older company, this agreement is a document that will provide peace of mind once it is in place.
The purpose of a shareholders agreement is to cover key issues in a business relationship, for example:
Our template deals with all of these issues. Putting in place a written agreement between the shareholders helps to ensure the smooth running of the company. Shareholders agreements greatly reduce the risk of a shareholders’ dispute occurring in the first place. If a dispute does occur, then with a proper agreement in place, it will be much quicker to resolve. It also becomes far cheaper and less stressful to resolve, as the agreement includes a watertight mechanism to sort this out. So you save on legal costs, stress and wasted management time by using a good shareholders agreement.
It is a key document for shareholders in any business, but particularly great for small businesses or start-ups, due to its bargain price. Both majority and minority shareholders benefit from the comprehensive protection provided by a suitable agreement. It also works really well when the shareholders hold equal numbers of shares, e.g. 50/50 or 33/33/33, 25/25/25/25, etc, but you can also use it when there are not equal shareholdings, e.g. 75/25, 60/40, etc.
If you are still in any doubt over whether you need this agreement, please click on this link to our separate blog article that explains the need for one. Wikipedia also has a helpful article on what such agreements commonly cover: read it here. Call our free helpline now on 0333 355 4900 if you are still not sure.
David drafted this document. He is our co-founding, experienced company and commercial solicitor. You get a template that you can rely on to be both comprehensive and free of legal jargon. David is an expert in shareholders agreements and has drafted many of these agreements for past clients. He has also dealt with resolving many shareholder disputes, so knows well how to prevent shareholder disputes arising. He brings all of this experience to bear in creating a great legal contract for you at a very low cost. As a contrast, using a solicitors’ firm to draft a customised agreement for you would cost in the region of £2,000 plus VAT normally.
The template agreement is simple to complete. We include detailed guide notes to walk you through every clause in the shareholders agreement. You can view a sample or abbreviated version of the guidance notes here. It covers all of the standard areas one would expect such an agreement to cover.
Included in the download when you buy this template are:
So you can simply pick and use the version you need. Each comes with its own guide to help you complete it. The guide walks you through the agreement clause-by-clause, so it is much more than just a checklist of the matters to include. You will know what the purpose of each clause is and how to fill it in, by deleting options that do not apply and filling in small details.
We have not adapted most of our drafts specifically for use in Scotland. However, this one has, so you can use it for a company that is registered in Scotland, as well as one registered in England and Wales.
Download this shareholders agreement in Word format. It is not available as a PDF as it will be much easier to edit in Word format. Once downloaded, edit it to your requirements.
The download includes great guidance notes. They take you through each clause in the agreement for absolute clarity. This makes completing the final agreement simple for you. As an example, you should allow for around an hour to complete the document.
The agreement is 14 pages in length. It provides robust protection for all shareholders, whilst remaining clear and simple to complete.
Below, we have answered the top questions from the Internet on this topic.
A shareholders’ agreement outlines the rights, responsibilities, and obligations of shareholders in a company. This legally binding document addresses matters such as ownership percentages, voting rights, dispute resolution, and the transfer of shares, helping to ensure clarity and fairness among shareholders with the added ability to be customised to meet the specific needs of the company and its investors.
A shareholders agreement is a legally binding contract voluntarily entered into by the shareholders of a company, and it is enforceable under the law, with violations having the potential to lead to lawsuits or injunctions. It serves as an important tool for regulating the relationship and rights of shareholders within a company.
It is highly advisable to have a shareholders agreement when a situation to do so arises. You can help to prevent disputes by:
It is the best way to provide legal protection and dispute resolution for the company and its shareholders, helping to protect the value of the shares.
A shareholders’ agreement offers several benefits:
Without a shareholders’ agreement the rights, responsibilities, and ownership percentages for each shareholder may be unclear, leading to possible disputes or costly legal battles. Minority shareholders will end up with limited protection, the company may lack a structured process for making key decisions, transfer of ownership may come with extra challenges, and confidentiality regarding sensitive information may not be as safe. All of this can lead to Increased risk of instability and conflicts within the company, as well as legal gaps that can potentially expose the company to risks.
In order to be legally enforceable, a shareholders agreement needs to be in writing. While oral agreements can have some legal validity, written agreements are strongly recommended to ensure clarity, provide evidence of the agreed terms, and minimise disputes. A written document is also better suited to protecting the rights and ownership of shareholders.
A standard shareholders’ agreement should include clauses addressing:
Key issues in a shareholders’ agreement include:
When writing this sort of agreement, begin with an introductory section stating the agreement’s purpose and parties involved. Once you move on to the main text of the agreement, be sure to include:
Review and revise the agreement as necessary, ensuring it remains up-to-date and legally compliant, as well as customising any additional clauses to your individual agreement.
A shareholders’ agreement is typically drafted by a lawyer or a legal professional with expertise in corporate law, but this is not a necessity. The Legalo shareholders agreement template is drafted by experienced solicitors and just needs the addition of your and your company’s information. Your resulting agreement will be legally binding and will address all relevant and necessary issues that must be detailed in it.
The parties to a shareholders’ agreement can include:
If a party breaches a shareholders’ agreement, consequences may include legal action, damages payments or penalties, remedy actions such as share buyouts, or termination of the agreement or removal from the board. The specific consequences depend on the terms outlined in the agreement and applicable laws, so can be different depending on the agreement. Is is important to include a mechanism to resolve disputes and breaches in your shareholders agreement.
In the UK, a shareholders’ agreement does not typically require witnesses for validity. However if you are having witnesses, then witnesses can be any individuals who are:
The cost of drafting a shareholders’ agreement can vary significantly depending mainly on complexity. Complex agreements, especially those involving lawyers for customization and legal advice, can range from hundreds to thousands of pounds or more, but with a Legalo template you can ensure that your agreement will be legally binding and comprehensive for just £44.95.
The main aim is for all, or a significant majority of, shareholders to sign the shareholders’ agreement, so that the mechanisms for the transfer of shares and resolution of disputes apply to all the key shareholders. If there are any shareholders that have not signed the agreement, then you may also need suitable Articles of Association with share transfer provisions in them, so that they are all bound by the important share transfer clauses. You would follow this method if you had a few employee shareholders, perhaps while using an employee share option scheme.
Alternative mechanisms include:
However, these alternatives may have significant problems in addressing all the complexities of shareholder relationships when compared to a well-drafted shareholders’ agreement.
Yes, a shareholders’ agreement can sometimes bind directors if:
However, they have separate obligations and statutory duties under company law that could affect their actions, even if the agreement specifies certain rights or restrictions. It’s important to ensure that the shareholders’ agreement and company’s articles of association are consistent and compliant with relevant legal requirements to avoid conflicts or legal issues.
