Shareholders' Agreement- Original Shareholders & Company

This document is a short-form shareholders' agreement template designed for use between existing shareholders in a private limited company and the company itself. It outlines the key provisions governing the relationship between the Company and its Original Shareholders, including definitions of essential terms, shareholdings, and financing arrangements. The agreement specifies the scope of business activities, the appointment and removal of directors, and the warranties provided by each shareholder. It also details the company's obligations to maintain proper accounts, promote its business, and protect its intellectual property rights. Shareholders' covenants ensure significant changes to the company require their consent, and pre-emption rights provide a structured process for share transfers.  Additionally, the document includes restrictive covenants, confidentiality clauses, and termination conditions. It emphasises the importance of written amendments, the non-waiver of rights, and the governing law and jurisdiction, ensuring a comprehensive framework for shareholder relations.

The following is a brief summary of some of the template's key provisions.

1. Parties Involved: The agreement is between the Company and the Original Shareholders.
2. Definitions: Key terms such as Annual Budget, Articles, Board, Business Day, and Confidential Information are defined.
3. Shareholdings and Financing: Initial finance is provided by the Original Shareholders, and additional working capital should be sourced externally unless otherwise agreed.
4. Business Scope: The business activities are confined to specified areas unless agreed otherwise by the Shareholders.
5. Directors: Provisions for the appointment, removal, and remuneration of Directors are outlined.
6. Warranties: Each Shareholder warrants their authority and compliance with the agreement.
7. Accounts and Information Rights: The Company must maintain proper books of account and provide financial statements and Board meeting minutes to Shareholders.
8. Company Covenants: The Company must promote its business, maintain insurance, and protect its Intellectual Property Rights.
9. Shareholders’ Covenants: Shareholders must ensure the Company does not make significant changes without their consent.
10. Transfers and Allotments of Shares: Shareholders cannot transfer shares without prior consent and must execute a Deed of Adherence.
11. Pre-emption Rights: Shareholders have the right of first refusal on share transfers, with a detailed process for determining fair price and allocation.
12. Restrictive Covenants: Shareholders agree not to compete with the Company or solicit its employees, customers, or suppliers for a specified period after ceasing to be Shareholders.
13. Confidentiality: Parties must keep Confidential Information private and return or destroy it upon leaving the Company.
14. Termination: The agreement ceases when a Party no longer holds Shares, subject to certain conditions.
15. Variation and Severability: Amendments must be in writing, and invalid provisions do not affect the rest of the agreement.
16. Waiver: No delay or omission in exercising rights under the agreement constitutes a waiver.
17. Rights of Third Parties: Only Parties to the agreement can enforce its terms.
18. Assignment: Shareholders cannot assign their rights or obligations without consent.
19. Entire Agreement: This document supersedes all previous agreements related to its subject matter.
20. Succession: The agreement binds successors and assigns.
21. Time of the Essence: All time-related provisions are critical.
22. Counterparts: The agreement can be signed in multiple counterparts.
23. Costs: Each Party bears its own costs related to the agreement.
24. Power of Attorney: Shareholders appoint the Company as their attorney to enforce the agreement.
25. Governing Law and Jurisdiction: The agreement is governed by the laws of England and Wales, with disputes settled in its courts. 

All documents on this website are supplied subject to our Terms of Sale 

Publisher’s Notice:

Note: This publication does not necessarily deal with every important topic, nor cover every aspect of the topics with which it deals. Templates do not include or provide legal or other advice to users. They are designed to provide a head-start to the development of a commercial agreement and are not the finished article. They require careful reading, analysis and customisation in order to meet the particular needs of the parties to the document. 

All templates and other documents downloaded from this website are subject to our Terms of Sale. 

Any enquiries about this document can be directed to info@contracts-direct.com.

Publisher: Atkins-Shield Ltd: Company No. 11638521 
Registered Office: 71-75, Shelton Street, Covent Garden, London, WC2H 9JQ

E&OE

Atkins-Shield Ltd © 2024