Shareholder agreements

Taking out a loan or receiving investment where a security arrangement is involved? Or maybe you are providing a loan or making an investment and would like to secure your funds? We'll make sure you fully understand the terms and that they suit your business. If you're a lender, we’ll advise on the best ways to protect your funds.

We have significant expertise in preparing and tailoring shareholders agreements to your specific requirements including where the company has equal shareholders and where the company has majority and minority shareholders.

No matter the format, we will provide commercial and efficient advice in order to achieve your objectives.

Shareholder agreements: protecting your business & your rights

A shareholder agreement sets out how a company is run and establishes clear expectations between shareholders. It’s an essential tool for avoiding disputes and ensuring that everyone understands their rights and responsibilities from the outset.

A well-drafted agreement helps shareholders plan for different scenarios (such as one shareholder leaving the business or a third-party takeover offer) so that unexpected changes don’t lead to unwanted consequences.

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Shareholder agreements: protecting your business & your rights

3 reasons why you need a shareholder agreement

1. Protecting minority shareholders

In most cases, English company law follows majority rule, meaning shareholders with over 50% of the shares control most decisions. Without an agreement, minority shareholders have little say in key company matters. A shareholder agreement can grant protections for minority shareholders, such as: - The right to a board seat - Access to company information - Veto power over major decisions Our team can help structure an agreement that safeguards minority interests while ensuring your business continues its growth and development.

2. Managing decision-making for equal shareholders

When shareholders have equal stakes, it’s crucial to have a clear decision-making process. Without one, disagreements can lead to deadlock. A shareholder agreement can set clear voting thresholds (e.g. requiring a majority of three out of four votes) to keep the company running smoothly. We’ll help you tailor an agreement that keeps decision-making efficient and avoids unnecessary disputes.

3. Setting the tone for how the company is run

A shareholder agreement provides a framework for governance, covering: - Shareholder approval thresholds for key decisions - Appointment and removal of directors - Share transfers and issuance rules - Shareholder obligations and restrictions By agreeing on these terms upfront, shareholders create stability and avoid future uncertainty. Our team will guide you through the key considerations to ensure your agreement reflects the unique needs of your business.

When you need a shareholder agreement

If your company has more than one shareholder, it’s highly advisable to have an agreement in place. Here’s why:

In the early days, it might seem like you don’t need a formal agreement, especially if everything is running smoothly. But disagreements can arise over time, and, without a shareholder agreement, you may find yourself relying on default legal provisions that don’t fully protect your interests.

A well-drafted agreement provides clarity and a structured approach for resolving disputes, ensuring minimal disruption to your business. If you’re unsure where to start, we can help you determine the key provisions needed for your specific situation.

“ "As a long-standing client of 3volution, the team consistently provide a first-class service from start to finish." Gareth Chambers, Around Noon Foods Limited

Why choose 3volution?

We have extensive experience in drafting tailored shareholder agreements for all types of businesses, whether you have equal shareholders or a mix of majority and minority interests. Our commercial, personal, and pragmatic advice ensures that your agreement meets your objectives and protects your business. Whether you’re setting up a new agreement or reviewing an existing one, we’ll guide you through every step to ensure your shareholders’ interests are aligned.

Do you need expert advice on shareholder agreements? Get in touch with us using the form below, and let’s discuss how we can help you safeguard your business and its future.

Shareholder agreements