Shareholder Agreement Template (UK) for Recruitment Agencies
Whilst trust between partners and equity holders is great to have, a shareholders agreement template is essential if you are starting a company with two or more people. Without a shareholders agreement, you put yourself at risk should any future conflict arise as to how the company should be run.
Shareholder Agreements: What do they do?
Well, they define the legal relationships between the shareholders, the company operation structure and determine when any dividends will be paid and at what intervals. Shareholder agreements can work alongside your articles of association to ensure that should an issue arise, the solution has already been discussed offering you invaluable protection.
Shareholder Agreements: Equity
A shareholder agreement sets out the rights of existing shareholders when new shares of the corporation are issued or sold. This could ensure that if an existing shareholder sold their shares, the other existing shareholders would be offered a right of first refusal, ensuring that the shares can not be sold to a third party.
Shareholder Agreements: Planning for the unexpected
Your shareholder agreement template can also determine what will happen upon the death of a shareholder. The default position upon death is that the shares will be pass to the deceased’s estate. Your shareholder agreement template will avoid this outcome by stipulating what happens to shares when a shareholder dies.
Legally, there is no requirement for a limited company to have one in place, however it is recommended that every limited company establishes a shareholders agreement, as it will govern and regulate the relationship between your shareholders. The underlying purpose of a shareholders agreement is to protect the shareholders’ investment in the company.
The shareholders can decide in advance about what would happen to the shares of a deceased shareholder e.g., if the shares revert to the company and is split amongst the surviving shareholders according to their respective shareholdings or if it is transmitted to the personal representatives of the deceased shareholder with restricted or non-restricted voting rights. Whatever option is preferred can then be reflected within the shareholders’ agreement.
Not necessarily, as it depends on what the existing articles states and the type of arrangements or agreements the shareholders are looking to enter into.
If a shareholder dies and there is no shareholder agreement setting out what should happen and no specifics within the articles, then the shares will transmit to the deceased’s personal representatives with full voting rights and no restrictions asides from those already in force and borne by the deceased at the time of death