When to write a shareholders’ agreement

A shareholders’ agreement is easiest to write when everyone gets on. That’s also when it feels least necessary, which is why so many companies don’t have one until they need it.

What it covers

The agreement sits alongside the company’s articles. Where the articles set out how the company runs, the agreement sets out how the owners deal with each other. The usual topics are:

• Which decisions need everyone’s consent

• What happens to a shareholder’s shares if they leave, fall ill or die

• Whether shareholders can sell to outsiders, and who gets first refusal

• How a deadlock is broken

The right moment

Three moments come up again and again: when the company is set up, when a new shareholder or investor joins, and when one founder’s role starts to change. Any of the three is a good time. The worst time is after a disagreement has started, because every clause becomes a negotiation.

What it costs

For a company with up to four shareholders on standard terms, our fixed fee starts at £2,400 plus VAT. More shareholders, investor terms or unusual share classes add to that, and we tell you the fee before we start.

The agreement you write when you all get on is the one that helps when you don’t.

This is general information, not advice on your situation.