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COMPANY COMMERCIAL

SHAREHOLDER AGREEMENT

Tees Law

Fact sheet

Considerations for a shareholder agreement If you are considering entering into a new company arrangement with other parties, you should certainly consider putting in place a shareholder agreement to govern the relationship between the parties. This is not intended to be an exhaustive list of matters, but this covers a number of the points that will need to be considered when looking to put together a shareholder agreement.

1 The company • What is the Company to be called, and if already registered what is the Company name, registration number and address

• What is the Company’s business

• Are there any restrictions on the number and value of shares which the company may issue

• Who are the intended shareholders and are the shares to be held equally

• Who are the intended directors

2 Finance for the company

• Are new shares to be issued, and if so how many and what rights do these have?

• Will there be investment by way of loan from all or any of the shareholders and, if so, what are the terms of the loan ?

• Will there be obligations on the parties to make loans or provide capital in the future?

3 Transfer of existing shares and issuing new shares

• Are shares to be offered to employees and/or directors

• Will there be an obligation to offer shares which are to be sold to the other shareholders before being sold to a third party?

• How will employees’ and/or directors’ shares be dealt with once the employee leaves the company or a director ceases to be a director?

• Will the valuation of shares depend on the circumstances of departure?

• Will the company have the option in the first instance to buy back the shares of a member who is leaving?

• Will there be circumstances where a shareholder is obliged to sell shares such as death or insolvency?

• Will new shares be offered to existing shareholders before being offered outside the company?

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4 Management

• Does each shareholder have the right to be involved in management and, if so, to what extent?

• How many people need to be present for a decision to be made at a director’s meeting and/or a shareholder’s meeting?

• Does the chairman of the board of directors have a casting vote?

0800 0131165 teeslaw.co.uk commercial@teeslaw.co.uk

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SHAREHOLDER AGREEMENT

5 Majority vote?

Are there any matters which require a certain majority vote or unanimous approval, ie

• Changing share capital

• Large capital expenditure

• Borrowing or lending

• Changing the company or business name

• Changing the nature of the business

• Buying a business

6 Financial matters

• Is there a requirement for formal a budget and business plan, and if so:

• How should these be approved;

• What is their frequency

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• Will a formal dividend policy be required

...professional, highly capable in not only highlighting legal issues to the Society but also by showing an in-depth knowledge of the Society’s business...

7 Company protection

Will the shareholders and/or directors be subject to:

• Restrictive covenants; or

• Confidentiality obligations.

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COMPANY COMMERCIAL

At Tees you’ll find an extremely capable team of experienced lawyers who specialise in businesses, for more information or to arrange a free initial consultation contact us on the details opposite.

Barry Wood, CEO Designate

0800 0131165 teeslaw.co.uk commercial@teeslaw.co.uk

This Factsheet has been prepared to provide useful information but should not be considered as a substitute for advice on any specific case. Tees Law is a trading name of Stanley Tee LLP regulated by the Solicitors Regulation Authority. Registered in England and Wales number OC327874.

Bishop’s Stortford Great Dunmow

Cambridge Northampton

Chelmsford Saffron Walden

100/27.2.13


Shareholders Aggrement