The Importance of shareholder agreements

Are you a business with multiple shareholders and if so have you got a Shareholders’ Agreement in place? As Corporate & Commercial legal expert, Chris Brightling explains, if you are and haven’t you must.

Chris says the most avoidable problems he deals with are companies that do not have a Shareholders’ Agreement in place who then run into issues or disagreements with other shareholders.

A Shareholders' Agreement is an optional supplement to the terms laid out in the company’s Articles of Association. Whereas the articles act as a contract between the shareholders and the company, a Shareholders' Agreement lays out additional obligations between shareholders. A Shareholders' Agreement is not a public document and does not have to be registered with Companies House and is drawn up in the interests of the shareholders, not the company, and signed by each member when the agreement is created.

Dispute resolution is an important area often covered by a Shareholders' Agreement and establishes an approved process for settling disagreements which could involve the services of a professional mediator or arbitrator.

It is important to seek good legal help to ensure that Articles of Association and Shareholders’ Agreements are created correctly and work in the best interests of everybody involved as they are legal documents that are fundamentally important for the successful running of a business.