Shareholders Agreement Template Uk

Shareholders Agreement Template UK Free

1. Document Preamble & Recitals

THIS SHAREHOLDERS AGREEMENT (the "Agreement") is entered into 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 situated at [Registered Office Address] and company registration number [Company Registration Number] (the "Company");
2. [Shareholder 1 Legal Name/Entity Name], residing at / having its registered office at [Address] (hereinafter referred to as "[Shareholder 1 Designation, e.g., Founder]"); and
3. [Shareholder 2 Legal Name/Entity Name], residing at / having its registered office at [Address] (hereinafter referred to as "[Shareholder 2 Designation, e.g., Investor]").

(The aforementioned individual and corporate shareholders are collectively referred to herein as the "Shareholders" and individually as a "Shareholder".)

WHEREAS: (A) The Company has an issued and allotted share capital of [Number] ordinary shares of nominal value [£0.01] each, held by the Shareholders in the proportions set out in Schedule 1 of this Agreement. (B) The parties hereto wish to define their respective rights and obligations as shareholders of the Company, to provide for the orderly management and governance of the Company, and to regulate certain aspects of the relationship between the Shareholders and the Company.

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

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2. Operational Definitions

In this Agreement, except where the context otherwise requires, the following expressions shall have the following meanings:

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 commercial, financial, technical, or otherwise) disclosed by or on behalf of any party to another party pursuant to this Agreement that is designated as confidential or which by its nature ought reasonably to be considered confidential.
5. "Director" means a director of the Company from time to time.
6. "Encumbrance" means any mortgage, charge, pledge, lien, option, restriction, right of pre-emption, right of first refusal, third-party right or interest, or other encumbrance or security interest of any kind.
7. "Fair Value" means the fair value of the relevant Shares as determined independently by the Auditors or an independent chartered accountant jointly appointed by the disputing parties.
8. "Group" means the Company and any subsidiary undertakings from time to time.
9. "Holding Company" and "Subsidiary" shall have the meanings ascribed to them by section 1159 of the Act.
10. "Intellectual Property Rights" 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 confidential information, and all other intellectual property rights, in each case whether registered or unregistered.
11. "Prohibited Transfer" means any transfer of Shares made in violation of Section 3 or any other provision of this Agreement.
12. "Shares" means any ordinary shares, preference shares, or other classes of shares in the capital of the Company from time to time.

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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, constituted in accordance with this Section 3.1 and the Articles of Association of the Company.
2. Each Shareholder holding not less than [Percentage, e.g., 20]% of the issued voting shares in the Company shall have the right to nominate and appoint [Number] person(s) to act as a Director of the Company, and to remove and replace such Director at any time by written notice to the Company.
3. The quorum necessary for the transaction of business at any meeting of the Board shall be [Number] Directors, which must include the nominee(s) of [Specific Shareholder, e.g., the Investor].

3.2 Information and Inspection Rights

1. The Company shall deliver to each Shareholder holding more than [Percentage, e.g., 10]% of the Shares:
   • (a) Unaudited management accounts within [30] days following the end of each calendar quarter.
   • (b) Annual audited financial statements prepared in accordance with UK GAAP or IFRS within [120] days following the end of each financial year.
   • (c) An annual operating budget and business plan not later than [30] days prior to the commencement of each financial year.
2. Authorized representatives of each major Shareholder shall be permitted, upon reasonable prior written notice, to inspect the books, records, and facilities of the Company during standard business hours.

3.3 Transfer of Shares & Restrictions

1. Except as expressly permitted under this Agreement, no Shareholder shall sell, assign, transfer, pledge, charge, or otherwise dispose of any Shares or any legal or beneficial interest therein without the prior written consent of the Board and the holders of a majority of the issued Shares.
2. Right of First Refusal: If any Shareholder (the "Selling Shareholder") wishes to transfer any Shares, they shall first offer such Shares to the other Shareholders (the "Continuing Shareholders") pro rata to their existing shareholdings, at the same price and on the same terms as offered by a bona fide third-party purchaser.
3. Tag-Along / Drag-Along: Standard provisions apply whereby if holders of [75]% or more of the Shares agree to sell their shares to a third party, they may compel the remaining Shareholders to sell their Shares on the same terms; conversely, minority Shareholders shall have the right to tag along in such a sale.

3.4 Shareholder Representations and Warranties

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

1. It has full power, authority, and legal capacity to enter into, execute, and perform its obligations under this Agreement.
2. The execution and delivery of this Agreement do not and will not conflict with, violate, or constitute a breach of any law, regulation, court order, or contract to which such Shareholder is a party.
3. Its Shares are free and clear of any and all Encumbrances whatsoever.

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4. Default, Termination, and Remedies

4.1 Events of Default

A Shareholder shall be deemed to be in default under this Agreement (a "Defaulting Shareholder") if:

1. They commit a material breach of any provision of this Agreement or the Articles of Association and fail to remedy such breach within thirty (30) business days of receiving written notice specifying the breach and requiring it to be remedied.
2. An order is made, or an effective resolution is passed, for the winding up, liquidation, or administration of a corporate Shareholder (otherwise than for the purpose of a solvent amalgamation or reconstruction).
3. They commit an act of bankruptcy, become insolvent, or make any composition or arrangement with their creditors.

4.2 Consequences of Default

1. Upon the occurrence of an Event of Default, the non-defaulting Shareholders holding a majority of the non-defaulting shares may serve a written notice (a "Compulsory Transfer Notice") requiring the Defaulting Shareholder to transfer all of their Shares to the non-defaulting Shareholders at a purchase price equal to [Eighty Percent (80%)] of the Fair Value of such Shares (or the nominal value, whichever is lower), determined as of the date of the Event of Default.
2. The Defaulting Shareholder shall immediately forfeit all voting rights and information rights associated with their Shares upon the issuance of the Compulsory Transfer Notice until such time as the transfer of their Shares is completed.

4.3 Termination

This Agreement shall terminate automatically and be of no further force or effect upon the occurrence of any of the following events:

1. The winding up, liquidation, or dissolution of the Company.
2. The listing or admission of the Shares of the Company on the London Stock Exchange or any other recognized international investment exchange.
3. The written agreement of all Shareholders to terminate this Agreement.

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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 oral or written statements, warranties, representations, or assurances which are not expressly 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 (excluding strikes involving the workforce of the party seeking to rely on this clause).

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. If any dispute arises out of or in connection with this Agreement, the parties shall first attempt in good faith to resolve it through senior management negotiations.
2. If the dispute is not resolved within thirty (30) business days of commencement of formal negotiations, 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 / 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 duly executed and delivered as a deed by the parties or their duly authorized representatives on the Effective Date.

The Company

EXECUTED and DELIVERED as a DEED by [Company Name]
Acting by [Name of Director], a Director
In the presence of:

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Signature of Witness

Name: [Witness Name]
Address: [Witness Address]
Occupation: [Witness Occupation]

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Signature of Director

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Shareholder 1

EXECUTED and DELIVERED as a DEED by [Shareholder 1 Name]
In the presence of:

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Signature of Witness

Name: [Witness Name]
Address: [Witness Address]
Occupation: [Witness Occupation]

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Signature of Shareholder (or Authorized Signatory)

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Shareholder 2

EXECUTED and DELIVERED as a DEED by [Shareholder 2 Name]
In the presence of:

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Signature of Witness

Name: [Witness Name]
Address: [Witness Address]
Occupation: [Witness Occupation]

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Signature of Shareholder (or Authorized Signatory)

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Schedule 1: Shareholding Breakdown (Omitted from template body; append relevant share registers as required).