If you own a company with other people, you’ve probably agreed who holds which shares.
The rest is often something you talked about once and never wrote down, like who signs off on big decisions, what happens if one of you wants to sell, or how you’d bring in an investor later.
A shareholders agreement puts those answers in writing, so nobody has to rely on memory a few years from now. It’s optional, but a good idea as soon as your company has more than one owner.
Starting from a shareholders agreement template makes it quicker, and most agreements for small UK companies cover the same eight things.
The agreement starts with the basics: who holds which shares, who the directors are, and whether any shareholder gets the right to appoint a director.
In a small company, the same people are often both. Owning shares and running the company are still separate roles, and the agreement can say what each one covers.
Most of the detail goes into decision-making.
By default, most shareholder votes pass with more than half. Bigger changes, like rewriting your articles of association, need at least 75%. So anyone holding more than 25% of the votes can block a big change on their own.
On top of that, the agreement can list reserved matters, which are decisions that need every shareholder, or an agreed majority, to say yes. Common ones include selling the business, taking a large loan, bringing in a new shareholder or changing what the company does.
Some agreements also set a spending limit. Any payment or contract above that amount needs approval first.
Once you’ve agreed who decides what, you can also choose who sees and does what in your company account. With an Ampere business account, you can add your co-directors, an accountant or a finance person, and each of them gets their own login with only the access you decide. You can add them once your business account is approved.
If your company was set up from October 2009 onwards and you didn’t write your own articles, it uses the government’s standard ones, called the model articles. Under those, the only real limit on selling shares is that the directors can refuse to register the transfer.
Most agreements add a pre-emption right. A shareholder who wants to sell has to offer the shares to the existing owners first, before anyone outside the company. The agreement usually also says how the price is worked out.
There are two more important rules if someone wants to buy the whole company.
Drag-along lets the majority make the minority sell on the same terms, so the buyer can get 100% of the shares. Tag-along protects the smaller owners. If the majority sells, the minority can join the deal and get the same offer.
Leaver clauses cover what happens to someone’s shares when they stop working in the business.
Many agreements split leavers into two groups.
A good leaver, for example someone retiring or stepping back for health reasons, often gets market value for their shares. A bad leaver, such as someone let go for misconduct or for breaking the agreement, may have to sell for less, sometimes only what they paid.
The agreement can also plan for a co-owner who can’t work for a long time or passes away. A common approach is giving the rest of you the option to buy their shares, so ownership stays with the people running the business.
When the company is ready to grow, you can raise money through new shares, shareholder loans or an outside investor.
Company law usually lets existing shareholders buy new shares first, so they can keep their percentage. Private companies can switch that rule off, which is why many agreements spell out when new shares can be issued and who gets first offer.
Anyone who joins as a new shareholder signs a short document called a deed of adherence, which adds them to the agreement you already have.
By law, a company can only pay dividends from profit it has built up, after any past losses.
Within that limit, a dividend policy can set roughly how much profit you pay out each year and how much stays in the company. An owner who works in the business full time and one who only invested might want very different payouts, so agreeing early keeps dividend time short and friendly.
A deadlock clause matters most when shares are split 50/50, or when reserved matters need everyone’s approval. In both cases, one disagreement can stop a decision completely.
The clause gives you a way forward, like a cooling-off period, mediation, an independent expert or a deciding vote for the chair at board meetings.
If none of that works, many agreements fall back on a buy-sell clause. One owner names a price, and the other has to either buy at that price or sell at it, so whoever names the price has every reason to keep it fair.
You all agree to keep company information private. The agreement can also say that anyone who leaves won’t compete with the business or approach its clients and staff for a set period.
Keep those limits reasonable, both in how long they last and what they cover, since a court can refuse to enforce ones that go too far.
Going through all eight with a template is a good start, and filling one in together gets everyone’s plans out in the open early.
Still, the percentages, prices and leaver rules need to fit your own company. Have a lawyer check the final version against your articles, since changing it later usually needs everyone who signed it to say yes. Once it’s signed, keep a copy with your company records and open it again whenever someone joins, leaves or takes on a new role.
