Shareholders agreement: Joint Venture

This document is for a situation where two or more shareholders are forming a new company to work together on a project which may be of any length, but is intended to have an end date.

This may be a project to develop a property, engage in property dealing, set up a website for sale, or buy a company specifically to sell off its assets.

The shareholders may or may not be directors. Their contributions by way of loans may be different. One or more may work part time or not at all. One may be a “hands off” lender.

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.