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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?

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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


• Will a formal dividend policy be required

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7 Company protection

Will the shareholders and/or directors be subject to:

• Restrictive covenants; or

• Confidentiality obligations.



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

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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


Shareholders Aggrement  

Know what are the considerations that you need to take into account before entering into an agreement with other parties.