To ensure your business operations run efficiently, and that you and your colleagues are prepared for every eventuality, you should have Director and Shareholder agreements put in place. These agreements, regulate the relationship between directors and shareholders; ownership of shares; general management structure of the company; dividend policies and provides protection for shareholders in case of deadlock situations and valuation of shares.
A well drafted shareholder’s agreement will establish the rights and responsibilities of all shareholders. Procedures for dispute resolution between shareholders and directors should also be mentioned, so any unforeseen disputes can be resolved quickly. Shareholder agreements need to provide protection for the shareholder, should the company go into shareholder deadlock, divestment, spin-off or insolvency. Directors must also ensure that the articles of association do not conflict with the shareholder’s agreement as this could cause confusion, disputes and in some cases litigation.
In the absence of a shareholder’s agreement, any disputes between shareholders and directors will be resolved by referring to the articles of association. However, articles of association may not have the correct procedures in place to offer a shareholder adequate protection, which is why it’s essential to make a shareholder agreement prior to your company formation, or the appointment of a shareholder.
Typical terms and conditions of Directors and Shareholders agreement can involve:
- The appointment and dismissal procedure for directors
- The restriction of freedoms on the disposal of shares and pre-emption rights for remaining shareholders
- The protection of minority shareholders from decisions made by majority so that crucial decisions require unanimous approval
- Regulating the raising of capital
- Restrictions on changing the nature of the business
- Dividend policies
- Limitations on directors’ freedom of action
It is important for directors and shareholders to seek legal advice to establish their duties, responsibilities and rights before entering into business together. However, if you need to make a shareholder agreement after your company has been incorporated, our corporate lawyers can also help with drafting Director and Shareholder Agreements and offer dispute resolution tactics should issues arise.
If you are concerned about the legal costs involved, don’t worry. Our legal experts can offer you affordable payment solutions so you can pay over monthly instalments to suit your individual circumstances. Contact a member of our legal team today to start your payment plan on 0203 376 1888.
Spread your legal expenses conveniently over time to minimise impact on your business
We provide payment plans to cover your legal costs, so you or your business can get the legal support you require – without the need for large up front payments.
We will connect you with a lawyer who specialises in company law matters and who is right for your individual circumstances. If you have already appointed a lawyer, we can still offer you a payment plan solution and will make all the necessary arrangements with your lawyer on your behalf.
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