{"id":1422,"date":"2017-10-10T14:03:28","date_gmt":"2017-10-10T13:03:28","guid":{"rendered":"http:\/\/www.tayloremmet.co.uk\/blsblog\/?p=1422"},"modified":"2017-10-10T14:03:28","modified_gmt":"2017-10-10T13:03:28","slug":"shareholders-agreement","status":"publish","type":"post","link":"https:\/\/www.tayloremmet.co.uk\/blogs\/shareholders-agreement\/","title":{"rendered":"Shareholders’ agreement: Important points to consider"},"content":{"rendered":"

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Many businesses have considered disaster recovery when it comes to their banking arrangements or IT systems. However, it is equally important to have provisions that can be put in place at any time to deal with major events that might occur during the life of a business such as: disputes between shareholders; the absence of key personnel for a prolonged period or the death of an owner. Hence the appeal of a shareholders’ agreement.<\/span>
\nThese events can have a catastrophic impact on a business and there is a significant risk in just relying upon business legislation to protect your company. Whilst the Companies Act 2006 incorporates generally accepted principles of company law, these principles have to apply to all types of companies, and often the needs of the owner managed limited company are not adequately provided for. For instance, there is no general right to force a shareholder to sell their shares. Company owners often wrongly assume that they can buy out dissenting shareholders or be bought out. The worst case scenario here is that the company would have to be wound up and its assets distributed to its owners. This would be wholly unsatisfactory for a successful business with value.<\/span><\/p>\n

A preferred solution<\/span><\/strong><\/span><\/p>\n

The preferred solution for regulating the relationship between shareholders is the execution of a shareholders’ agreement. This is a private document between shareholders and can also be binding on the company if there are obligations for the company to adhere to. It can contain detailed arrangements relating to individuals, and can record the following information:<\/span><\/p>\n