In the world of business, planning for the unexpected is vital. This is especially true when it comes to business succession and exit strategies. Shareholder agreements play a pivotal role in this process. They provide a roadmap for the future, outlining how transitions will be handled.

A Founders Agreement is a legal document that outlines the rights, responsibilities, ownership stakes and decision-making processes among the founders of a startup. It is vital for setting expectations and minimising conflicts, acting as a preemptive measure to address potential disagreements.

In the UK, the legal landscape surrounding shareholder disputes is complex. It is governed by a mix of statutory law, common law, and contractual agreements. Understanding this landscape is crucial for shareholders, directors, and corporate lawyers alike.

Understanding the intricacies of a Shareholders Agreement is essential for any business, Founders about to incorporate a startup, or for a sole Founder looking to expand by taking on new co-Founders or other shareholders or investors. This legal document plays a pivotal role in defining the operational framework of a company. The shareholder agreement format is important as it outlines the rights and obligations of shareholders and the company and provides a framework for decision-making processes. A well-formatted Shareholders Agreement can be instrumental in avoiding disputes among shareholders. It can also ensure the equitable treatment of all parties involved and…

A shareholders agreement is a vital element of any arrangement that involves bringing shareholders into a business. As a legal document that outlines the rights, responsibilities and obligations of shareholders and the company, it is a mutually beneficial agreement protecting the business and the shareholders. It sets out the rules regarding the control of important decisions by the shareholders, the transfer of shares, non-compete obligations, confidentiality clauses and dispute resolution. At JPP Law we only provide bespoke shareholders agreements, but we understand why startups opt for the cheaper solution of a shareholders agreement template. In our view a good template,…

The Commercial Team at JPP Law outline the reasons why every company should have a shareholders agreement.

Creating the right shareholders agreement for a company isn’t straightforward. No two agreements are exactly the same. Understandably, some boot strapping startups will try to save money by creating their own shareholders agreement using a template, but this can be a false economy. Every business is different and is exposed to a different set of risks, so it’s important to have a bespoke agreement developed and put in place from the outset. Every shareholders agreement needs to be developed according to the needs of the company and its shareholders and neglecting to put one in place can have seriously damaging…

If you are planning to appoint a new director to work in your business who will also acquire shares in your company then, as well as drawing up a service level agreement to govern their employment, you will also need to consider whether you need to make any changes to your current shareholder agreement.

Becoming a minority shareholder or investor in a business may lead you to believe that, given the limited rights you will have, there are not many important considerations to take into account. However, even a minority investor needs to protect their interests as much as possible and to be able to share or exit its investment in a fair manner. While minority shareholders may not usually benefit from voting rights, it is important to ensure they have access to drag along or tag along rights which provide them with a fair exit. All investors need to know what their rights…

To ensure your interests and your business are protected you need an experienced team advising you so the final terms are both fair and workable in the long term. If you are considering a funding round, congratulations! It’s an incredible achievement to build a business that is worthy of external investment. That said, if this is new territory for you, it’s highly recommended to seek professional support, including lawyers and accountants, to guide you through the process.| Thinking about a Funding Round? The type of investor you want to attract will be astute and experienced. To ensure your interests and…