Shareholders’ agreements are contracts entered into between all of the shareholders of a company and the company itself with the intention for the agreement to govern the relationship between all of the parties.
They form part of the company’s constitution similar to the company’s articles of association but have the advantage of being a private confidential document which is not publicly available.
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Shareholders’ agreements can cover and expand upon areas of corporate governance and company law to ensure the smooth and effective running of your company.
Shareholders’ agreements can help you in the following ways:
Direction – allow the majority of your shareholders to have a say in the direction and management of the business (most commonly done through mechanisms which require the majority of shareholders to give their written approval before a specific action can be undertaken by the company);
Protection – afford protection to minority shareholders and majority shareholders through provisions known as drag along (if a majority of the shareholders agree to sell their shares, they can compel the remaining minority shareholders to also sell their shares, ensuring that a prospective buyer can acquire 100% of the company) and tag along rights (minority shareholders can require a majority selling shareholder to compel the buyer to extend its offer to all shareholders of the company);
Control – give shareholders the right to first refusal to any share transfer or issue of new shares so as to avoid having their shares diluted and / or having unknown third parties becoming shareholders in smaller / family-run companies;
Safety – impose trading restrictions on current and past shareholders to ensure that no shareholder can carry out or enter into a business which would be in competition with the company’s business;
Incentive – require employees who are also shareholders to sell their shares for a specified amount should they cease to be employees;
Certainty – detail the process to be undertaken in unexpected situations concerning the shareholders (such as the death of a shareholder); and
Valuation – provide a mechanism for determining the value of the shares in the event of a share transfer.
How can we assist?
Our entrepreneurial, flexible, organised and free-thinking style combined with an ability to build great relationships with all parties involved allows us to quickly connect and offer a range of solutions and recommendations for your company’s constitutional documents.
We have a wide range of knowledge and experience with drafting and reviewing shareholders’ agreements ranging from small start-up businesses with only two shareholders to larger private companies with a vast number of shareholders.
We also have particular experience in relation to creating a suitable agreement where outside investors are joining the company. We commonly work with equity investors and/or founders, understand their expectations and can advise on appropriate provisions which investors expect to see in shareholders’ agreements while ensuring that the founders retain as much control as possible.
In short, we can help you understand all aspects of the shareholders’ agreement and work with you to create a comprehensive and all-encompassing agreement that is right for you and your company.
Our experienced team is on hand to help
The Jonathan Lea Network comprises a talented and passionate team of legal experts who are dedicated to go above and beyond for their clients. Whether you are looking for straightforward legal advice to resolve a simple matter, or need several lawyers of mixed experience and specialisms to work together on a complex multi-party case, we are here to help and always aim to exceed your expectations.
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Great help from Jonathan Lea Network, in particular Kent Reynolds and Radosveta Stoeva who went to great lengths to understand my story and formulate a great legal response. I would recommend them to anyone if they had a similar problem to mine
Kent Reynolds and Radosveta Stoeva have been extremely helpful in a number of legal cases that I have had to deal with.
The general advice and all subsequent action regarding a number of residential property, commercial property and company law cases I had, was fantastic and made the whole experience as pain free as possible.
Kent and Radosveta are very pleasant to work with.
I don't really want to leave a 5* review as would prefer to keep their superb, responsive service to our business! However I can confirm that Kent Reynolds offered superb and very fast advice in a contract negotiation which enabled us to agree some sensible contract amendments & get the deal signed. Excellent.
Received great support from the Jonathan Lea Network team, in particular from Ashley Wong, Paralegal. They quickly understood my needs, developed a sensible and pragmatic solution and prepared the supporting paperwork in a short timescale. Very efficient from start to finish and reasonable rates with no hidden costs. No hesitation in recommending.
Appointed Jonathan Lea to help us with a share subscription agreement and the level of service was a breath of fresh air. I specifically worked with Radosveta and I can honestly say every company needs a Radosveta. working with her was amazing.
Always happy to engage the services of this top team of professionals at The Jonanthan Lea Network who have helped dozens of my business clients with all aspects of their legal needs.
Professional, knowledgeable and responsive, the team has simplified complex issues and stayed on top of important deadlines to ensure the best outcomes for the entrepreneurs I work with.
Special thanks goes to Jonathan for leading a trustworthy and cohesive team that genuinely cares about its clients, and to Callum Ritchie and Reina Menezes D'costa for their high-quality and reliable support.
Working with Jonathan Lea and in particular Callum Ritchie has been a great experience. The attention to detail; meeting tight deadlines; and, conducting consistently thorough and timely communications - these were all at a very high standard. Would recommend their/his services highly.
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I have had the pleasure of undertaking a month-long internship at The Jonathan Lea Network, which really has significantly boosted my enthusiasm to complete my SQE exams and become a fully qualified solicitor.
I am also delighted to join JLN as a full time paralegal from February!
Sarah Lungley coordinated successfully setting up our Share Options EMI scheme, backed by Jonathan Lea personally and supported by Graeme Burnham (Complete Accounting Solutions) as the accountant in the team.
Please note that this team approach, bringing legal and accounting specialists together, worked well for us.
For us, being totally new to EMI share options, we were very professionally led through the process, our many questions answered - at the outset and en-route.