Shareholders' Agreement: Why Have One?

A limited company shareholders' agreement is the equivalent of a partnership agreement. If more than one shareholder is part of a company, these agreements are very useful ...

"Shareholder agreements establish fair relationships!"

There is no law saying you have to have a shareholders' agreement as there's no filing requirement via Companies House. Still, I highly recommend them if you're in business with other people.

They have many advantages, including:

- preventing shareholders falling out
- regulating the management of the company
- offering protection for both the majority and minority shareholders
- controlling the transfer of shares
- potentially linking shareholdings to employment
- applying restrictions on the exit of a shareholder resolving disputes
- demonstrating business stability
- offering the mechanism for a varied dividend policy

Any business owner could encounter issues like these, so I always recommend them if you're thinking of going into business with someone else and choosing a limited company structure.

"The same applies if you're bringing another shareholder onboard!"

I strongly believe all the shareholders should review them regularly to ensure everyone is working according to the agreed shareholders' agreement and make adjustments if needed.

If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.