Shareholder Agreement Template Uk

Shareholder Agreement Template UK

1. Document Preamble & Recitals

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, with its registered office located at [Registered Office Address] and company registration number [Company Registration Number] (the "Company");
2. [Majority Shareholder Name], residing at [Address] or having its registered office at [Registered Office Address] (the "Majority Shareholder"); and
3. [Minority Shareholder Name], residing at [Address] or having its registered office at [Registered Office Address] (the "Minority Shareholder").

(The Majority Shareholder and Minority Shareholder are hereinafter collectively referred to as the "Shareholders" and individually as a "Shareholder".)

RECITALS:

(A) The Company has an issued share capital of [Number] ordinary shares of [Currency and Nominal Value, e.g., GBP 1.00] each, held by the Shareholders in the proportions set out in Schedule 1 hereto. (B) This Agreement is intended to govern the relationship between the Shareholders, the management and governance of the Company, the regulation of rights attaching to the shares, and the restrictions on the transfer of shares in the capital of the Company. (C) The parties intend for this Agreement to take effect as a deed and to be binding upon themselves, their respective personal representatives, successors, and permitted assigns.

NOW, THEREFORE, in consideration of the mutual covenants, promises, and obligations 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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2. Operational Definitions

For the purposes of this Agreement, except where the context otherwise requires, the following terms shall have the meanings ascribed to them below:

1. "Act" means the Companies Act 2006 (as amended from time to time).
2. "Board" means the board of directors of the Company for the time being.
3. "Business Day" means a day (other than a Saturday, Sunday, or public holiday in England) on which clearing banks are open for general commercial business in London.
4. "Confidential Information" means all information (whether oral, written, or recorded in any other medium) of a confidential nature relating to the business, finances, technology, trade secrets, intellectual property, customers, or suppliers of the Company.
5. "Defaulting Shareholder" has the meaning ascribed to that term in Clause 4.1.
6. "Fair Value" means the fair value of the relevant shares as determined independently by an agreed firm of Chartered Accountants in the event of a dispute or deadlock under this Agreement.
7. "Group" means the Company and any subsidiary undertakings, parent undertakings, and subsidiary undertakings of any parent undertaking from time to time.
8. "Intellectual Property" means patents, rights to inventions, copyright and related rights, moral rights, trademarks, trade names, domain names, rights in get-up, rights in goodwill, rights in computer software, database rights, and all other similar or equivalent intellectual property rights.
9. "Majority Shareholder" means a Shareholder holding not less than [Percentage, e.g., 51%] of the voting shares of the Company.
10. "Permitted Transfer" means a transfer of shares executed in accordance with Clause 3.3.
11. "Shareholder" means any holder of shares in the Company who is a party to this Agreement or has acceded to it.
12. "Shares" means any ordinary shares, preference shares, or other classes of shares in the capital of the Company issued from time to time.
13. "Transfer" includes any sale, assignment, pledge, mortgage, encumbrance, gift, declaration of trust, or disposal of any kind whatsoever in respect of any Share.

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3. Substantive Terms & Obligations

3.1 Governance and Board Composition

1. The management and control of the business and affairs of the Company shall be vested in the Board.
2. The Board shall consist of up to [Number] directors, of whom the Majority Shareholder shall have the right to appoint [Number] directors, and the Minority Shareholder shall have the right to appoint [Number] directors.
3. Any director may be removed and replaced at any time by the Shareholder who originally appointed them, by notice in writing to the Company.

3.2 Reserved Matters

1. The Company shall not, and the Shareholders shall exercise all voting rights and powers available to them to ensure that the Company does not, execute any of the "Reserved Matters" set out in Schedule 2 without the prior written consent of both the Majority Shareholder and the Minority Shareholder.

3.3 Restrictions on Transfer of Shares

1. Except as expressly permitted by this Agreement or with the prior unanimous written consent of the Board and all Shareholders, no Shareholder shall Transfer any Shares or any interest therein.
2. Right of First Refusal: If any Shareholder wishes to Transfer any Shares (the "Selling Shareholder"), they shall first offer those shares to the non-selling Shareholders pro rata to their existing shareholdings, at the same price and on the same terms offered by a bona fide third-party purchaser.
3. Tag-Along / Drag-Along Rights: The agreement incorporates standard tag-along and drag-along provisions as detailed in Schedule 3.

3.4 Representations and Warranties

Each Shareholder severally represents and warrants to each other Shareholder and to the Company that:

1. It has full power, capacity, and authority to enter into and perform its obligations under this Agreement.
2. The execution and delivery of this Agreement have been duly authorized by all necessary corporate and legal actions.
3. This Agreement constitutes legal, valid, and binding obligations enforceable against it in accordance with its terms.
4. The execution of this Agreement does not and will not violate any law, regulation, order, or contractual obligation to which it is subject.

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4. Default, Termination, and Remedies

4.1 Events of Default

A Shareholder shall be deemed to be a "Defaulting Shareholder" upon the occurrence of any of the following events (each a "Default Event"):

1. Material Breach: A material breach of any provision of this Agreement or the Articles of Association of the Company, which breach is not remedied in accordance with Clause 4.2.
2. Insolvency: The passing of a resolution for winding up, the appointment of an administrator, administrative receiver, liquidator, or similar officer over all or a substantial part of the assets of the Shareholder, or the inability to pay debts as they fall due within the meaning of Section 123 of the Insolvency Act 1986.
3. Execution/Distraint: Any execution, attachment, or other legal process is levied or enforced against any substantial part of the Shareholder’s assets and is not discharged within [Number] days.

4.2 Notice and Cure Period

1. Upon the occurrence of a remediable Default Event, any non-defaulting Shareholder or the Company may serve a written notice of default upon the Defaulting Shareholder detailing the nature of the breach.
2. The Defaulting Shareholder shall have a strict cure period of thirty (30) Business Days from the date of receipt of such notice to remedy the breach to the reasonable satisfaction of the non-defaulting parties.

4.3 Remedies Upon Default

1. If a Defaulting Shareholder fails to cure the default within the 30 Business Day cure period, or if the default is incapable of remedy, the non-defaulting Shareholders may, by written notice, require the Defaulting Shareholder to transfer all of its Shares to the non-defaulting Shareholders (or a designated third party) at a purchase price equal to [Percentage, e.g., 80%] of the Fair Value or nominal value of the Shares, whichever is lower.
2. The Defaulting Shareholder shall immediately forfeit all voting and dividend rights associated with its Shares until the completion of the compulsory transfer mandated herein.
3. The remedies specified in this Clause 4 are cumulative and shall not prejudice any other legal or equitable right or remedy available to the non-defaulting parties under English law.

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5. Boilerplate Legal Provisions

5.1 Severability

If any provision or part-provision of this Agreement is or becomes invalid, illegal, or unenforceable, it shall be deemed modified to the minimum extent necessary to make it valid, legal, and enforceable. If such modification is not possible, the relevant provision or part-provision shall be deemed deleted. Any modification or deletion shall not affect the validity and enforceability of the rest of this Agreement.

5.2 Entire Agreement

1. This Agreement constitutes the entire agreement between the parties and supersedes and extinguishes all previous drafts, agreements, arrangements, and understandings between them, whether written or oral, relating to its subject matter.
2. Each party acknowledges that it has not relied upon 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 acts of God, flood, drought, earthquake, epidemic or pandemic, terrorist attack, civil war, nuclear, chemical, or biological contamination, or strikes (a "Force Majeure Event"). The affected party shall promptly notify the other parties in writing upon becoming aware of a Force Majeure Event.

5.4 Governing Law

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 Jurisdiction

1. In the event of any dispute, controversy, or claim arising out of or relating to this Agreement, the parties shall first attempt in good faith to resolve the dispute through senior management negotiations within [Number] days of a written dispute notice.
2. If the dispute is not resolved through negotiations, it 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 / three], the seat of arbitration shall be London, England, and the language of the proceedings shall be English.
3. Subject to the arbitration clause above, each party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this Agreement.

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6. Formal Execution Block

IN WITNESS WHEREOF, this Agreement has been executed as a deed and delivered by the parties or their duly authorized representatives on the Effective Date first written above.

EXECUTED as a DEED by [Company Name]

Acting by a Director, in the presence of:

_____________________________________________
Signature of Director

Name: `[Director Name]`
Title: Director

Witness Signature: ___________________________
Witness Name: `[Witness Name]`
Witness Address: `[Witness Address]`
Witness Occupation: `[Witness Occupation]`

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EXECUTED as a DEED by [Majority Shareholder Name]

Acting in the presence of:

_____________________________________________
Signature of Majority Shareholder (or Authorized Signatory)

Name: `[Signatory Name]`
Title: `[Title/Capacity]`

Witness Signature: ___________________________
Witness Name: `[Witness Name]`
Witness Address: `[Witness Address]`
Witness Occupation: `[Witness Occupation]`

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EXECUTED as a DEED by [Minority Shareholder Name]

Acting in the presence of:

_____________________________________________
Signature of Minority Shareholder (or Authorized Signatory)

Name: `[Signatory Name]`
Title: `[Title/Capacity]`

Witness Signature: ___________________________
Witness Name: `[Witness Name]`
Witness Address: `[Witness Address]`
Witness Occupation: `[Witness Occupation]`