Shareholder Agreements

A Shareholder Agreement is the contract between the shareholders of a limited company and, although not an exhaustive list, includes the following areas (to protect the business and resolve disputes if shareholders fall out):

• the management of the business
• restrictions on the transfer of shares
• the sale of shares should a buyer be found
• dividend policy
• restrictive covenant.

Such an agreement is often complimented by a ‘cross-option’ contract. A ‘cross-option’ contract is  designed to ensure that funds are made available via an insurance scheme to acquire the shareholding of a deceased shareholder. Very few companies are cash-rich enough to fund such a purchase out of their own reserves, and the surviving shareholder(s) probably won’t want shares to be inherited, therefore new business partners to suddenly appear.

For further information on Shareholder Agreements, please contact us at the details below:

Brian Auld Partner Tel: (01295) 661 436 Email: brianauld@brethertons.co.uk

Leanne Booth Solicitor Tel: (01788) 559 513 Email: leannebooth@brethertons.co.uk