A shareholders’ agreement is a private contract which governs the relationship between shareholders of a company. Company law provides that shareholder power is determined by the proportion of voting rights in the company. Certain statutory provisions can be overridden by the provisions of a shareholders’ agreement, but this is subject to certain limitations. Shareholders’ agreements will typically govern:

  • Exercise of shareholders’ rights under the Companies Act 2006
  • Shareholder obligations
  • Dividend policy
  • The relationship between shareholders
  • The sale and transfer of shares
  • The issue of new shares

Shareholders’ agreements are not a compulsory requirement under current legislation. However, we would always advise shareholders of limited companies to consider entering into shareholders’ agreements to ensure that the rights of individual shareholders are adequately protected. In particular, shareholders’ agreements are often used to protect minority shareholders.

Our experience

  • Negotiating and drafting shareholders’ agreements
  • Legal and beneficial ownership of shares
  • The rights of beneficial owners
  • The exercise of membership rights by a corporate shareholder
  • The procedural requirements for the transfer of shares
  • The transmission of shares by operation of law (death and bankruptcy)
  • Dividends and voting rights