Shareholder Agreements and Corporate Governance

What a shareholders' agreement does

A company's articles of association bind everyone and are public. A shareholders' agreement is a private contract between the owners (and usually the company) that sets out how the business will be run and what happens when circumstances change. Together they should cover:

• Decision-making: which matters need board approval, which need shareholder consent, and which need a particular shareholder's consent (reserved matters).
• Money: how the business is funded, dividend policy, and what happens if further capital is needed.
• Transfers of shares: pre-emption rights, permitted transfers, drag-along and tag-along rights on a sale.
• Leavers: good and bad leaver provisions, vesting for founders, and compulsory transfer at a fair or discounted value.
• Deadlock: escalation, mediation, and buy-out mechanisms where two 50% owners cannot agree.
• Protection of the business: confidentiality, non-compete and non-solicitation covenants, and IP ownership.
• Exit: how and when the shareholders expect to sell, and how the proceeds are shared where there are different share classes.

Investment rounds and growth

When outside investors come in, the documents change: a subscription agreement, investor-friendly articles with preference shares and anti-dilution protection, warranties from founders, information rights and board seats. We act for founders and for investors in seed and early-stage rounds, including SEIS and EIS-compatible structures, advance subscription agreements and convertible loan notes. Our aim is a fair, market-standard set of documents that does not burden the company with terms it will regret at the next round.

Governance and disputes

Good governance is mostly good habits: board meetings with minutes, resolutions filed on time, registers kept up to date, and conflicts of interest declared. We provide practical governance support to companies that have grown faster than their paperwork. When relationships break down, we advise on unfair prejudice petitions under section 994 of the Companies Act 2006, derivative claims, director removal, and the negotiated buy-outs that resolve most shareholder disputes without court. See also commercial disputes.

1. Term sheet

   We work through a plain-English term sheet with you to settle the commercial points before drafting.

2. Drafting

   Shareholders' agreement and articles that match each other and your term sheet.

3. Negotiation and signing

   We negotiate with co-founders' or investors' advisers, then handle board and shareholder resolutions, filings and share certificates.

Frequently asked questions