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What is a shareholders’ agreement and why do I need one?

A shareholders’ agreement is a vital piece of the jigsaw when establishing a company, or reorganising the shares of an existing entity.

Shareholders agreements establish the business structure and put procedures in place to deal with scenarios that could threaten the future of the business. Preparing the agreement creates a clear understanding of how the business will operate on a day to day basis, when particular scenarios arise or if it is facing a crisis. They can be particularly helpful where certain tax structures are used.

A shareholder agreement may cover:

  • Composition of the board of directors
  • Restriction on the transfer of shares
  • Dividend policy
  • Conflict resolution processes
  • Corporate governance
  • Death or incapacity of a director
  • Exit strategies
  • Confidentiality
  • Any rights of members to veto the actions of the directors

WMT can help you prepare a shareholders’ agreement, negotiating the terms of the agreement between parties so that shareholders and directors accurately define the terms and conditions under which the business will operate.

Do you still have questions? Get in touch with our corporate finance team to find out more about how they can help you.

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