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Why do I need a Shareholders’ Agreement?

4 December 2017

Why do I need a shareholders agreement

All limited companies will have Articles of Association, which are essentially a rule book for the directors. In addition to the Articles, you may wish to create a Shareholders’ Agreement. This is a rule book for the shareholders.

So why would you want one?

Privacy

A company’s Articles of Association are available to the public and can be viewed by anyone, at Companies House. In contrast, a Shareholders’ Agreement is not publically available. It is a chance to set some rules out between the shareholders, without letting the world in on the agreement.

Certainty

Disputes between the shareholders in a company can be time consuming, costly and damaging to the business. If clear rules are set out in black and white, disputes can be “nipped in the bud”.

Control

Within the agreement you can regulate;

  • How shareholders can transfer shares;
  • When shareholders will be able to work with competing businesses; and
  • When dividends should be paid.

For assistance in preparing a Shareholders’ Agreement or reviewing your current agreement, contact Luke Pritchard on 01270 625478 or by email at luke.pritchard@poolealcock.co.uk . Alternatively you can visit our commercial services page here for more information or fill in this form and we will get in contact with you at your convenience.

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