Shareholders' agreements

The articles of association say what the law requires and what the public may read. Much of what shareholders actually agree between themselves stays outside them: who sits on the board, what happens if a buyer appears, how further funding will be found. Left unwritten, these understandings depend on memory and goodwill, and both tend to fade just when the company needs them most.

A shareholders’ agreement puts those understandings on paper, privately and in more detail than the articles usually allow. It is drafted for the relationship as it is today and as it may turn out, and it covers:

• the rules on drag-along and tag-along rights when a buyer wants the whole company;
• the rules on lock-up periods during which shares may not be sold;
• the rules on call and put options, and on the price formula that goes with them;
• the rules on shareholders’ undertakings not to compete with the company or solicit its clients and staff;
• the rules on the right of each shareholder or group of shareholders to nominate board members;
• the rules on commitments to fund the company later, and on loans shareholders make to it;
• the rules on how long the agreement lasts, and on whether a party may end it on its own;
• the rules on binding a new shareholder to an agreement already in place.

Our lawyers can support you with this.