Businesses often begin with a friend or colleague using a limited company. At the early stages of a business relationship, focus tends to be on developing the business and shareholders often do not plan properly for the future.
Shareholders can by way of a shareholders' agreement benefit greatly from putting in place a mechanism for dealing with future changes in circumstances.
A shareholders' agreement, unlike the company's articles of association, is not a document that is required to be shown on the public record.
If you need a shareholder contract prepared, have been offered an agreement already drafted or perhaps need to adjust, edit or renegotiate an existing shareholder agreement Carter Bond can assist.
We have set out a few of the top headlines to be consider for your shareholders’ agreement:
1. Deadlock Resolution - avoiding disputes because the parties have already agreed what should happen in certain circumstances. For example, how to deal with deadlock in the event of equal shareholdings.
2. Drag Along - if the majority of shareholders want to be sure that they can sell 100% of the business they can have rights to “drag along” minorities. Drag along usually operates to ensure the minority shareholders dragged into the sale receive the same consideration as the majority.
3. Tag Along - these rights protect minority shareholders. Tag along rights allow a minority shareholder to sell if a majority shareholder sells.
4. Pre-emption Rights - this is a prohibition or restriction on the transfer of shares. This often includes a right of first option for existing shareholders to buy shares before a shareholder can transfer to a third party..
What We Do
- Reviewing or drafting shareholders' agreements.
- Assist in resolving shareholder disputes.
- Advise on the different classes of shares and rights attached to it.
- Assist with share transfers.