By Andrew Skinner - 11 Sep 2020
When starting a new business with another person, or
introducing a new shareholder, there are many aspects of the
business competing for your time. Often the relationship between
shareholders may be overlooked as you just want to get on with
things. However over time you might find that you and your other
shareholders have quite different ideas for the direction of the
business and how it should be managed. Agreeing a robust
shareholders agreement from the outset should help to avoid
problems in the future.
Recently we have been advising a
number of clients on shareholders agreements. These agreements are
really interesting to prepare because each shareholder relationship
is unique. We often start by providing clients with a questionnaire
which asks a number of key questions such as:
- Who are the proposed shareholders and how many shares do each
of them hold?
- Who will be the directors and how are the directors appointed
or removed?
- How will decisions be made by the Board?
- How will the company be funded and what is the dividend
policy?
- Will any decisions be reserved for shareholders over and above
the "major transactions" under the Companies Act?
- What restrictions will there be on the issue or sale of shares
(known as "pre-emptive rights")?
The responses to these questions make the owners think about the
governance and direction of the business. But what happens if a
dispute arises? A well prepared shareholders agreement should
include a process for resolving disputes and, if necessary, a
mechanism for resolving deadlocks that have the potential to damage
the business.
If you would like to know more about shareholders agreements
contact Andrew
Skinner today.