Shareholders agreement: existing company; working directors plus big lender
A very full shareholders agreement for an existing company,
perhaps on the introduction of new shareholders or
directors, or simply because "it is a good idea". Provides for
one of shareholders (not necessarily a director) to be a main
lender to the company whose interests require additional
protection and more consideration of exit strategy
About this document
This document is for a situation where one or more shareholders own an existing company in any business. All are probably directors. Shareholdings may be different. One or more may work part time or not at all.
They are joined by a new shareholder who is also a major lender. He may be a bank or an individual. This person has no role in the day to day administration of the company but is concerned to make sure that the company is operated within a set of acceptable “regulations”. This will include the provision of timely reports and appropriate accounts.
This document will be used most frequently for the occasion of a new lender providing capital to the business and taking a shareholding as part of the whole package. It is likely to be the lender's document as it is he who will see himself as needing the protection from the pre-existing shareholders.
This agreement may also be used when one existing executive shareholder retires to become non-executive, or for other reasons, decides to secure his position as a major lender to a company which has become controlled by others.
Shareholders' agreements set the ground rules for the relationship between shareholders. Mostly that means protecting the interests of one or more shareholders against the others. The directors operate a company and make the decisions, but the directors operate only in accordance with the instructions of the shareholders to whom they are accountable. Furthermore, to the extent that shareholders are also directors, they are bound to the terms of an agreement they have signed as a shareholder. So this means that it is really important to have a watertight shareholders agreement.
The document includes provision for valuation of the shares of a departing shareholder by reference to a valuation based on your instructions to an accountant. The valuation depends on the parameters used, so your instructions are critical. We have provided a comprehensive version which you can edit according to the deal you wish to strike with a selling shareholder.
Application
and features
Comprehensive template – simply delete what you do not need
Defines actions where shareholder consent is required
Limits the freedom of executive director or majority shareholders
Written in plain English
Explanatory notes to guide you through
Contents
Who shall be directors
Company's obligations
Actions for which shareholder consent is required
New intellectual property
Alternative end games / exit scenarios
Transfer of shares and right of pre-emption with full procedure
Matters following transfer
Transfers of shares on death
Conflict with the articles
Provision for mediation
89 warranties – see below for details
Other legal points The 89 individual warranties are in sections relating to:
Assets
Stocks
Accounts
Employees
Licences, consents and passwords
Insurance
Joint ventures and partnerships
Statutory restrictions
Litigation
Sellers activities
Contracts
Defective products and services liabilities
Freehold properties
Leasehold properties
Intellectual property
Internet domain names
General
Word
Count (approximate):
Document: 4730
words
Explanatory notes:
2180
words
Draftsman
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