Shareholders Agreement Template

State how many shares each shareholder will receive when the agreement is signed. This can change later without the need to update the Agreement.

Spell-out what's expected of each shareholder to make your company a success.

With all shareholders on the same page, sharing a clear and common vision for the company, you'll minimise the likelihood of disputes.

State when a shareholder can appoint a director. For example, if they hold at least 20% of the shares they can take up a seat on the board and direct the company's operations.

✅ Yes, tick! This comprehensive Shareholders Agreement contains all of the critical provisions to secure your business partnership.

Plus, you'll get easy to follow tips and examples to help you confidently turn your template into a legal document, customised for your requirements.

Identify whether each director will have an equal vote. Or, whether they get one vote for each share they hold.

A well drafted Shareholders' Agreement will include shareholder representatives as parties, in addition to the Shareholders. <br><br>

For example, if a shareholder is a company, you should also include the individual who controls that company as a party. That way, they are also bound by confidentiality and non-compete clauses. <br><br>

You can do this easily with our template, by including individuals as "Shareholder Represenatives".

While the directors can make day-to-day decisions, you can require a higher approval threshold for big decisions. The Agreement achieves this by requiring Special Majority Approval (eg of 75% of Shareholders, by shares) for Significant Matters. These matters commonly include, for example, a sale of the business or major capital expenditure.

Support your company's funding with loans from shareholders. These can be easily agreed by inserting the loan amount, interest rate and repayment terms in the template.

Our Shareholders Agreement template includes standard provisions requiring a shareholder, who wants to sell their shares, to first offer them to the existing shareholders. It's only if the existing shareholders decide not to take up the offer that the selling shareholder is allowed to sell their shares to a third party. <br><br>

This is called a pre-emptive right or right of first refusal clause. It gives the existing shareholders first preference to purchase shares, in proportion to the existing shareholdings. <br><br>

It is generally a good idea to include a pre-emptive right in a Shareholders Agreement for a private company, because it protects the existing shareholders. Of course, it works differently for a public company, where shareholders are often allowed to sell their shares whenever, and to whoever, they please.

If a shareholder let's the team down by breaching the Shareholders Agreement, they are regarded as a defaulting shareholder.

You can include a clause requiring them to sell their shares to the other shareholders at a discount to the market value. This acts as a discincentive for an errant shareholder who plans to do something wrong.

You can require, for example, that the unanimous approval of the existing shareholders is required before a new shareholder can acquire shares in the company.

You can decide whether a substantial shareholder group that is selling all of their shares to a third party will have the right to force the rest of the shareholders to go along with the sale. This is known as a "drag-along right". <br><br>

Generally, it's a good idea to include a drag-along right because it allows the majority of the shareholders to sell the entire company, without a minority shareholder blocking the sale.

The template includes sensible rules for the issue of new shares. These include: <br>

- the shares must be offered to existing shareholders first, before third parties <br>

- limited exceptions for the issue of shares or options to employees.

Remember when your little brother used to tag along, whether you wanted him to or not? <br><br>

Well, that's how a tag along clause works (sort of!). If a major shareholder wants to sell its shares, then a minority shareholder can also tag along and participate in the sale on the same terms. <br><br>

In most cases, it's useful to include a tag-along clause so minority shareholders don't miss out on a sale opportunity. Just like your little brother didn't want to miss out on the fun!

Our Shareholders Agreement template lets you include clauses to stop the shareholders: <br>

- competing with the business<br>

- poaching the company's employees and<br>

- taking away the company's suppliers. <br><br>

These clauses help protect the goodwil of the company and ensure all of the shareholers are working towards a common cause, rather than in conflict with the company.