Shareholder and Partnership Agreements - Harrogate & Leeds
If you are going into business with another person or persons, you might need a shareholders' agreement or partnership arrangement to make sure you get a fair return for your financial or non-financial investment.
Why have a Partnership Agreement or Shareholders Agreement?
A shareholders agreement is a contract between the shareholders (and, usually, the company as well) which governs the relationship between the shareholders and places some element of control over the day to day business of the company. A shareholders agreement will commonly provide for the following:
Restrictions on shareholders selling their shares
The ability to force certain shareholders to sell their shares to the others. This can be useful if there is a shareholder who is not “pulling his weight”, commits some wrongdoing, or in the event of the death or bankruptcy of a shareholder
Determination of the correct price to be paid for shares should a shareholder wish (or be forced) to leave the company
Restrictions on the issue of new shares
Rights of shareholders to nominate a director of the company
Restrictions on the way the company does business, for example in the spending of large sums or committing to big contracts, or employing staff on excessive salaries
Restrictions on what shareholders may do outside the company.
If there is no shareholders agreement in place, for as long as shareholders agree with the way the company’s affairs are managed and are happy with the relationships between themselves and the company, then no problems are likely to occur. However, when these matters break down, there is little in the general law than can be of much help – often the solution is drastic and results in the company ceasing to exist, or the shareholders engaging in lengthy and expensive legal battles. While a shareholders agreement cannot prevent every dispute, they can be a very useful tool in avoiding and managing such difficulties.
Our Commercial team are very experienced in advising on and preparing partnership and shareholder agreements. So if you’re looking for expert legal advice for your business, call us today on 01423 564551 or use our online contact form below. Our Commercial Law Solicitors will be able to help you to draw up shareholder & partnership agreements should the case arise.
Contact us on 01423 564551 or email us on info@powell-eddison.co.uk to arrange your free initial, no obligation consultation with a commercial law specialist.
Andrew Parascandolo
Managing Partner
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Phone: 01423 564551
Email: ap@powell-eddison.co.uk
