Shareholder Agreement Example Uk

SHAREHOLDER AGREEMENT EXAMPLE UK

THIS SHAREHOLDER AGREEMENT (the "Agreement") is entered into and made effective as of this [Day] day of [Month], [Year] (the "Effective Date"), by and among:

1. [Company Name], a private company limited by shares incorporated under the laws of England and Wales, having its registered office at [Registered Address] (company registration number [Registration Number]) (the "Company");
2. [Shareholder 1 Name], residing at [Residential Address] (or having its registered office at [Registered Address]) ("Shareholder 1"); and
3. [Shareholder 2 Name], residing at [Residential Address] (or having its registered office at [Registered Address]) ("Shareholder 2").

(Shareholder 1 and Shareholder 2 are hereinafter collectively referred to as the "Shareholders" and individually as a "Shareholder").

RECITALS

WHEREAS: (A) The Company was incorporated on [Incorporation Date] in England and Wales with an initial issued share capital of [Amount] divided into [Number] Ordinary Shares of £[Nominal Value] each, all of which are beneficially owned by the Shareholders in the proportions set forth in Schedule 1. (B) The parties hereto desire to define their respective rights, duties, and obligations as shareholders of the Company, to provide for the orderly management and operation of the Company, and to regulate certain aspects of the relationship between the Shareholders and the governance of the Company.

NOW, THEREFORE, in consideration of the mutual covenants, promises, and conditions contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

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SECTION 1: OPERATIONAL DEFINITIONS

1.1 "Act" means the UK Companies Act 2006, as amended from time to time.

1.2 "Board" means the board of directors of the Company from time to time.

1.3 "Business Day" means any day (other than a Saturday, Sunday, or public holiday in England) on which clearing banks are open for normal commercial business in London.

1.4 "Control" means, in relation to a body corporate, the power of a person to secure that the affairs of the body corporate are conducted in accordance with the wishes of that person (i) by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate, or (ii) by virtue of any powers conferred by the articles of association or other document regulating that or any other body corporate, and "Controlled" shall be construed accordingly.

1.5 "Defaulting Shareholder" has the meaning ascribed to it in Section 4.1.

1.6 "Fair Value" means the fair market value of the relevant Shares as determined jointly by the Shareholders or, in the absence of agreement within fourteen (14) Business Days, by an independent firm of chartered accountants appointed jointly by the disputing parties or, failing agreement, by the President for the time being of the Institute of Chartered Accountants in England and Wales (ICAEW).

1.7 "Good Leaver" means a Shareholder who ceases to be an employee, director, or shareholder of the Company by reason of death, permanent incapacity, or dismissal without Cause.

1.8 "Bad Leaver" means a Shareholder who ceases to be an employee, director, or shareholder of the Company by reason of summary dismissal for Cause, resignation without Good Reason, or material breach of this Agreement.

1.9 "Intellectual Property Rights" means patents, rights to inventions, copyright and related rights, moral rights, trademarks, trade names and domain names, rights in get-up, rights in goodwill or to sue for passing off, rights in designs, rights in computer software, database rights, rights in confidential information (including know-how and trade secrets), and any other intellectual property rights, in each case whether registered or unregistered and including all applications (or rights to apply) for, and renewals or extensions of, such rights and all similar or equivalent rights or forms of protection which subsist or will subsist now or in the future in any part of the world.

1.10 "Shares" means the ordinary shares of £[Nominal Value] each in the capital of the Company from time to time, and any other shares issued by the Company representing the equity capital thereof.

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SECTION 2: SUBSTANTIVE TERMS & OBLIGATIONS

2.1 Governance and Board Composition

(a) The Board shall consist of up to [Number] directors. Shareholder 1 shall be entitled to appoint [Number] directors, and Shareholder 2 shall be entitled to appoint [Number] directors by notice in writing to the Company. (b) A quorum for any meeting of the Board shall be at least one director appointed by each Shareholder. (c) The Chairman of the Board shall have [a / no] casting vote in the event of a deadlocked board.

2.2 Reserved Matters

Neither the Company nor the Board shall take any action, pass any resolution, or enter into any commitment in respect of the matters set out in Schedule 2 (Reserved Matters) without the prior written consent of both Shareholders.

2.3 Restrictions on Transfer of Shares

(a) Except as expressly permitted by this Agreement or with the prior written consent of all Shareholders, no Shareholder shall sell, assign, transfer, pledge, mortgage, charge, or otherwise dispose of any interest in any Shares. (b) Right of First Refusal: If any Shareholder (the "Selling Shareholder") wishes to transfer any Shares, they shall first offer such Shares (the "Sale Shares") to the non-selling Shareholders pro rata to their existing holdings, at the same price and on the same terms offered by a bona fide third-party purchaser.

2.4 Drag-Along and Tag-Along Rights

(a) Tag-Along: If Shareholders holding more than [Percentage]% of the issued Shares (the "Selling Majority") propose to sell their Shares to a bona fide third-party purchaser, the Selling Majority shall procure that the third-party purchaser makes a matching offer to acquire the Shares of the remaining Shareholders on the same terms and conditions. (b) Drag-Along: If Shareholders holding not less than [Percentage]% of the issued Shares (the "Dragging Shareholders") wish to sell all their Shares to a bona fide third-party purchaser, the Dragging Shareholders shall have the right to compel all other Shareholders to sell and transfer all of their Shares to the third-party purchaser on the same terms and conditions.

2.5 Financing and Additional Capital

If the Board determines that the Company requires additional working capital, the Shareholders shall be given the opportunity to provide such funding by way of equity subscription pro rata to their existing shareholdings. No Shareholder shall be mandated to provide debt or equity financing beyond their initial capital subscription unless expressly agreed in writing.

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SECTION 3: REPRESENTATIONS AND WARRANTIES

3.1 Each Shareholder and the Company severally represents and warrants to the other parties as of the Effective Date that: (a) It has full power, authority, and legal capacity to enter into, execute, and deliver this Agreement and to perform its obligations hereunder. (b) The execution and delivery of this Agreement and the fulfillment of the terms hereof will not result in a breach of, or constitute a default under, any material agreement, court order, or statutory provision to which it is a party or by which it is bound. (c) The Shares held by each Shareholder are owned legally and beneficially, free and clear of all liens, charges, encumbrances, and third-party claims.

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SECTION 4: DEFAULT, TERMINATION, AND REMEDIES

4.1 Events of Default

An event of default ("Event of Default") shall occur with respect to a Shareholder (the "Defaulting Shareholder") if: (a) The Shareholder commits a material breach of any provision of this Agreement or the Company's articles of association, and fails to remedy such breach within thirty (30) Business Days of receiving written notice from a non-defaulting Shareholder specifying the breach and requiring its remedy. (b) An order is made, or an effective resolution is passed, for the winding up, liquidation, or administration of the Shareholder (except for a solvent restructuring). (c) The Shareholder becomes bankrupt, makes any composition or arrangement with its creditors, or has an encumbrancer take possession of, or a receiver or administrative receiver appointed over, the whole or any substantial part of its assets.

4.2 Remedies on Default

Upon the occurrence of an Event of Default, the non-defaulting Shareholders may, by written notice to the Defaulting Shareholder within thirty (30) Business Days, elect to: (a) Require the Defaulting Shareholder to transfer all of its Shares to the non-defaulting Shareholders at a purchase price equal to [Percentage]% of the Fair Value (in the case of a Bad Leaver) or 100% of the Fair Value (in the case of a Good Leaver); and/or (b) Exercise any other legal or equitable remedies available under English law, including claims for damages and injunctive relief.

4.3 Termination

This Agreement shall terminate automatically upon: (a) The written agreement of all Shareholders; (b) The winding up, liquidation, or dissolution of the Company; or (c) The date on which all of the shares of the Company are held by a single shareholder.

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SECTION 5: BOILERPLATE LEGAL PROVISIONS

5.1 Severability

If any provision of this Agreement (or part of any provision) is found by any court or other authority of competent jurisdiction to be invalid, illegal, or unenforceable, that provision or part-provision shall, to the extent required, be deemed not to form part of this Agreement, and the validity and enforceability of the other provisions of this Agreement shall not be affected.

5.2 Entire Agreement

(a) This Agreement constitutes the entire agreement between the parties relating to its subject matter and supersedes and extinguishes all previous agreements, promises, assurances, warranties, representations, and understandings between them, whether written or oral, relating to its subject matter. (b) Each party acknowledges that it has not relied on any statement, representation, assurance, or warranty (whether made innocently or negligently) that is not set out in this Agreement.

5.3 Force Majeure

No party shall be in breach of this Agreement nor liable for delay in performing, or failure to perform, any of its obligations under this Agreement if such delay or failure result from events, circumstances, or causes beyond its reasonable control (including, without limitation, acts of God, flood, drought, earthquake or other natural disaster, epidemic or pandemic, terrorist attack, civil war, nuclear, chemical or biological contamination, strike, lockout, or failure of utility service).

5.4 Governing Law and Jurisdiction

This Agreement, and any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with it or its subject matter or formation, shall be governed by, and construed in accordance with, the laws of England and Wales.

5.5 Dispute Resolution and Arbitration

(a) If any dispute arises out of or in connection with this Agreement, the parties shall first attempt to resolve it through amicable negotiations between the senior representatives of the Shareholders within twenty (20) Business Days of written notice of the dispute. (b) If the dispute is not resolved pursuant to Section 5.5(a), the dispute shall be referred to and finally resolved by arbitration under the London Court of International Arbitration (LCIA) Rules, which rules are deemed to be incorporated by reference into this clause. The number of arbitrators shall be one. The seat, or legal place, of arbitration shall be London, England, and the language used in the arbitral proceedings shall be English. (c) Nothing in this Section 5.5 shall prevent any party from seeking urgent interim or injunctive relief from the courts of England and Wales.

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SECTION 6: FORMAL EXECUTION BLOCK

IN WITNESS WHEREOF, the parties hereto have executed this Shareholder Agreement as a Deed on the Effective Date first written above.

SIGNED AS A DEED by [Company Name]
acting by a Director:

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Signature of Director

Name: [Director Name]
Title: Director

In the presence of:
Witness Signature: __________________
Witness Name: [Witness Name]
Witness Address: [Witness Address]

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SIGNED AS A DEED by [Shareholder 1 Name]:

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Signature of Shareholder 1

In the presence of:
Witness Signature: __________________
Witness Name: [Witness Name]
Witness Address: [Witness Address]

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SIGNED AS A DEED by [Shareholder 2 Name]:

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Signature of Shareholder 2

In the presence of:
Witness Signature: __________________
Witness Name: [Witness Name]
Witness Address: [Witness Address]

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SCHEDULE 1: SHAREHOLDING STRUCTURE

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SCHEDULE 2: RESERVED MATTERS

1. Altering the articles of association of the Company.
2. Changing the name of the Company or its registered office.
3. Issuing any new shares, granting options or warrants over shares, or altering the share capital structure.
4. Declaring or paying any dividend or making any distribution of profits.
5. Approving the annual budget and business plan of the Company.
6. Incurred capital expenditure or borrowing exceeding £[Amount] outside the ordinary course of business.
7. Appointing or removing the Company’s auditors.
8. Selling, leasing, licensing, or disposing of the whole or a substantial part of the Company’s assets or Intellectual Property Rights.
9. Winding up, dissolving, or placing the Company into administration or voluntary liquidation.