Overview of key shareholder agreement clauses that matter in family investment companies, focusing on control, governance and decision-making.

Shareholder agreements in family investment companies: what clauses really matter?

Andrew Haimdas January 15, 2026

Family investment companies (“FICs”) are a well-established tool for families looking to manage, protect and pass on wealth in a structured way. FICs offer flexibility, continuity and clarity across generations.

The success of an FIC does not depend on its tax efficiency alone. In practice, it is important to have an agreement that reflects the family’s intentions, relationships and long-term objectives to navigate potential issues that may arise in the future. A shareholders’ agreement can govern all of these aspects and create an understanding between each of the family members.

Control and decision-making

Many families use an FIC to involve younger generations while retaining overall control and governance. A shareholder agreement allows this to be dealt with explicitly by setting out, for example:

which decisions require unanimous or enhanced consent;
which matters are reserved to specific shareholders (often the founders); and
how voting rights differ between share classes.

Without clearly defined decision-making rules, even routine matters can become contentious. A shareholders’ agreement does not seek to create more administrative burden but provide clarity, avoiding uncertainty and preventing unintended loss of control.

A control and decision-making clause ensures the company can operate efficiently as roles and responsibilities evolve.

Dividend policy and use of profits

A well-drafted shareholder agreement can address this by providing clarity on:

whether profits are to be distributed or retained;
how dividends are declared and prioritised; and
whether different shareholders have different entitlements.

A clear and unambiguous dividend policy reduces the risk of misunderstandings and resentment, particularly where some family members depend on income while others are focused on long-term growth.

Expectations around income and reinvestment can vary significantly within families but a shareholders’ agreement can be tailored to the specific needs and wants of the family members involved in the company.

Restrictions on share transfers

For most families, it is essential that ownership of the FIC remains within the family group. Shareholder agreements commonly include provisions dealing with:

transfers to non-family members;
divorce, death or insolvency; and
rights of first refusal in favour of existing shareholders.

These protections help ensure that shares do not pass to unintended third parties and that control of the company remains aligned with the family’s original objectives.

Exit and leaver provisions

Exit scenarios should be addressed while relationships between the parties are positive. An exit from the FIC may not be an event that the parties want to consider but it is important that a shareholders’ agreement provides protection to the company and other shareholders (however unlikely an exit may be). A shareholders’ agreement can set out:

when a shareholder may be required to sell their shares;
how shares are valued; and
the terms on which payment is made.

Clear exit provisions reduce the scope for dispute at difficult moments and provide a fair, predictable framework for all parties if circumstances change.

Deadlock resolution

Disagreements are not uncommon, particularly as families grow and perspectives differ. Sensible deadlock provisions may include:

escalation processes;
mediation or expert involvement; and
buy-out provisions (as a last resort).

Without a clear mechanism for resolving a deadlock, the company can become prevented from taking a specific course of action that may be in the company’s best interest.

Planning for future generations

One of the strengths of an FIC is its ability to adapt. A shareholders’ agreement can support this by allowing for:

new shareholders to be introduced over time;
changes in governance as the family expands; and
different levels of involvement between generations

Building in flexibility helps ensure the structure remains relevant and effective as family circumstances, priorities and size change over time.

How we can help

No two families are the same. An effective shareholders’ agreement are those that reflect not only legal requirements, but also the family’s values, dynamics and long-term plans. Bespoke drafting reduces the risk of conflict and provides clarity to all the parties involved.

Advising on family investment companies requires a careful balance of technical expertise and practical judgement. We work closely with families and their advisers to ensure shareholder agreements are robust, clear and aligned with wider estate and succession planning objectives.

If you are establishing a family investment company or reviewing an existing structure, we would be pleased to discuss how we can assist. We usually offer a no-cost, no-obligation 20-minute introductory call as a starting point or, in some cases, if you would just like some initial advice and guidance, we will instead offer a one-hour fixed fee appointment (charged from £250 plus VAT depending on the complexity of the issues and seniority of the fee earner).

Please email wewillhelp@jonathanlea.net providing us with any relevant information or call us on 01444 708640. After this call, we can then email you a scope of work, fee estimate (or fixed fee quote if possible), and confirmation of any other points or information mentioned on the call.

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This article is intended for general information only, applies to the law at the time of publication, is not specific to the facts of your case and is not intended to be a replacement for legal advice. It is recommended that specific professional advice is sought before relying on any of the information given. © Jonathan Lea Limited.