Simple Shareholder Agreement Template Uk

Simple 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 between:

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] (hereinafter referred to as the "Company"); and
2. [Shareholder 1 Name], residing at [Residential Address] or having its registered office at [Registered Office Address] (hereinafter referred to as "Shareholder 1"); and
3. [Shareholder 2 Name], residing at [Residential Address] or having its registered office at [Registered Office Address] (hereinafter referred to as "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 has been incorporated with an initial issued share capital of [Total Number] ordinary shares of nominal value [Nominal Value, e.g., £0.01] each, held by the Shareholders in the proportions set forth in Schedule A hereto. (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 governance of the Company, and to regulate the transfer of shares and other matters incidental thereto.

NOW, THEREFORE, in consideration of the mutual covenants, promises, 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:

---

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. "Articles" means the Articles of Association of the Company for the time being in force, as amended from time to time.
2. "Board" means the board of directors of the Company constituted from time to time in accordance with this Agreement and the Articles.
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. "Control" has the meaning given to that term in section 1124 of the Corporation Tax Act 2010, and "Controlled" shall be construed accordingly.
5. "Defaulting Shareholder" means any Shareholder who commits a material breach of this Agreement or becomes subject to an Insolvency Event.
6. "Encumbrance" means any mortgage, charge (fixed or floating), 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, or any agreement to create any of the foregoing.
7. "Fair Value" means the fair value of the relevant Shares as determined jointly by the Shareholders in writing or, in the absence of agreement within fourteen (14) Business Days, as determined by an independent firm of chartered accountants appointed jointly by the parties or, failing agreement on such appointment, by the President for the time being of the Institute of Chartered Accountants in England and Wales (ICAEW).
8. "Insolvency Event" means, in respect of any party, the occurrence of any of the following:
   • (a) such party passing a resolution for its winding-up, or a court of competent jurisdiction making an order for its winding-up or dissolution;
   • (b) the appointment of an administrator, administrative receiver, receiver, liquidator, or similar officer over the whole or any substantial part of such party's assets;
   • (c) the entering into of any composition or voluntary arrangement with its creditors generally; or
   • (d) any event analogous to the foregoing occurring in any applicable jurisdiction.
9. "Shares" means any ordinary shares, preference shares, or other classes of share capital in the capital of the Company issued from time to time.
10. "Transfer" includes any sale, assignment, transfer, gift, settlement, declaration of trust, creation of an Encumbrance, or any other disposal or alienation of any kind whatsoever, whether voluntary or involuntary, direct or indirect, and "Transferred" and "Transferring" shall be construed accordingly.

---

3. Substantive Terms & Obligations

3.1 Governance and Board Composition

(a) The management and control of the business and affairs of the Company shall be vested in the Board. (b) Each Shareholder holding not less than [Percentage, e.g., 25%] of the issued voting shares of the Company shall be entitled to nominate, appoint, and remove one (1) director to the Board by notice in writing served upon the Company and the other Shareholders. (c) The quorum necessary for the transaction of business at any meeting of the Board shall be [Number, e.g., two (2)] directors, including at least one (1) appointee of each Shareholder (if applicable).

3.2 Reserved Matters

Notwithstanding any other provision of this Agreement or the Articles, the Company shall not, and the Shareholders shall procure that the Company shall not, take any of the actions set out in Schedule B (the "Reserved Matters") without the prior written approval of Shareholders holding at least [Percentage, e.g., 75%] of the total voting rights in the Company.

3.3 Restrictions on Transfer of Shares

(a) Except as expressly permitted by this Agreement, no Shareholder shall Transfer any Shares or any interest therein without the prior unanimous written consent of all other Shareholders. (b) Right of First Refusal: If a Shareholder (the "Selling Shareholder") wishes to Transfer any or all of its Shares (the "Sale Shares"), it shall first offer them in writing (the "Transfer Notice") to the other Shareholders (the "Non-Selling Shareholders") pro rata to their existing holdings, at the same price and upon the same terms and conditions as offered to a bona fide third-party purchaser. (c) Tag-Along Right: If a Selling Shareholder proposes to Transfer a controlling interest in the Company to a third party, the Non-Selling Shareholders shall have the absolute right to require that the third-party purchaser acquires their Shares on the same terms and conditions. (d) Drag-Along Right: If Shareholders holding not less than [Percentage, e.g., 75%] of the issued Shares (the "Selling Majority") wish to sell all of their Shares to a bona fide third-party purchaser, they may require all other Shareholders (the "Called Shareholders") to sell and transfer all of their Shares to the said purchaser on the same terms and conditions.

3.4 Finance, Funding, and Performance Metrics

(a) The Shareholders acknowledge that the Company may require additional working capital from time to time. Any further capital contributions required by the Company shall be advanced by the Shareholders by way of equity subscription or shareholder loans pro rata to their respective shareholdings, unless otherwise agreed in writing. (b) The Shareholders shall use their respective best commercial endeavors to promote, develop, and safeguard the business interests, reputation, and commercial viability of the Company.

3.5 Warranties and Representations

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

• (a) it has full power, capacity, and authority to enter into and perform its obligations under this Agreement;
• (b) the execution and delivery of this Agreement has been duly authorized by all necessary corporate and legal actions on its part; and
• (c) its entry into this Agreement does not and will not conflict with, or result in a breach of, any law, regulation, order, or contractual obligation binding upon it.

---

4. Default, Termination, and Remedies

4.1 Breach Classifications

A breach of any material term, covenant, representation, or warranty contained within this Agreement shall constitute a "Material Breach". Without prejudice to the generality of the foregoing, any unauthorized Transfer of Shares in violation of Section 3.3 shall be deemed a per se Material Breach.

4.2 Notice and Cure Period

If a Defaulting Shareholder commits a Material Breach of this Agreement, any non-defaulting Shareholder may serve written notice of default upon the Defaulting Shareholder. The Defaulting Shareholder shall have thirty (30) Business Days from the date of receipt of such notice to remedy the specified breach (the "Cure Period"), provided that this Cure Period shall not apply to an Insolvency Event or any breach incapable of remedy.

4.3 Remedies upon Default

If a Defaulting Shareholder fails to remedy the Material Breach within the Cure Period, or if an Insolvency Event occurs: (a) The non-defaulting Shareholders shall have the option, exercisable by written notice within thirty (30) Business Days following the expiry of the Cure Period, to require the Defaulting Shareholder to sell all (but not part) of its Shares to the non-defaulting Shareholders (or their nominee) at a price equal to [Percentage, e.g., 80%] of the Fair Value or the nominal value of the Shares, whichever is lower. (b) The Defaulting Shareholder's voting rights, information rights, and dividend rights under this Agreement and the Articles shall be suspended for the duration of the default. (c) The non-defaulting parties shall retain all other remedies available at law or in equity, including specific performance and injunctive relief.

4.4 Termination

This Agreement shall terminate automatically upon the occurrence of any of the following events:

• (a) the winding up, liquidation, or dissolution of the Company;
• (b) the consummation of an initial public offering (IPO) of the Company's shares on a recognized stock exchange; or
• (c) the written agreement of all Shareholders to terminate this Agreement. Termination shall be without prejudice to any accrued rights, obligations, or liabilities of any party arising prior to such termination.

---

5. Boilerplate Legal Provisions

5.1 Severability

If any provision of this Agreement is found by any court or administrative body of competent jurisdiction to be invalid, unenforceable, or illegal, the other provisions shall remain in full force and effect. If any invalid, unenforceable, or illegal provision would be valid, enforceable, or legal if some part of it were deleted, the provision shall apply with whatever modification is necessary to give effect to the commercial intention of the parties.

5.2 Entire Agreement

(a) This Agreement, together with the Schedules and the Articles, constitutes the entire agreement between the parties relating to its subject matter and supersedes and extinguishes all previous drafts, agreements, arrangements, and understandings between them, whether written or oral, relating to its subject matter. (b) Each party acknowledges that it has not relied upon any oral or written statement, representation, warranty, or collateral agreement (whether made innocently or negligently) 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 results from events, circumstances, or causes beyond its reasonable control, including acts of God, flood, drought, earthquake or other natural disaster, epidemic or pandemic, terrorist attack, civil war, nuclear, chemical or biological contamination, or strikes, lock-outs or other industrial disputes (excluding strikes or lock-outs involving the workforce of the affected party).

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

(a) The parties shall attempt in good faith to resolve any dispute or claim arising out of or relating to this Agreement promptly through negotiations between senior representatives of the parties. (b) If the matter is not resolved through negotiations within fourteen (14) Business Days of the dispute arising, the parties shall attempt to settle the dispute by mediation in accordance with the Centre for Effective Dispute Resolution (CEDR) Model Mediation Procedure. (c) If the dispute is not settled by mediation within thirty (30) days of the commencement of the mediation, each party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with this Agreement or its subject matter or formation.

---

6. Formal Execution Block

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

The Company:

Executed as a Deed by [Company Name]
acting by a Director, in the presence of:

---

Signature of Director

Name: [Director Name]
Title: Director

---

Signature of Witness

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

---

Shareholder 1:

Executed as a Deed by [Shareholder 1 Name]
(If executing as an individual)

---

Signature of Shareholder 1

In the presence of:

---

Signature of Witness

Name of Witness: [Witness Name]
Address of Witness: [Witness Address]

(If executing as a Corporate Entity, replace the above with proper corporate execution blocks)

---

Shareholder 2:

Executed as a Deed by [Shareholder 2 Name]
(If executing as an individual)

---

Signature of Shareholder 2

In the presence of:

---

Signature of Witness

Name of Witness: [Witness Name]
Address of Witness: [Witness Address]

---

SCHEDULE A: Shareholding Structure

---

SCHEDULE B: Reserved Matters

1. Altering the articles of association of the Company or changing the rights attached to any class of shares.
2. Issuing any new shares, granting options, or issuing convertible securities.
3. Reducing the share capital or buying back any shares of the Company.
4. Passing any resolution for the voluntary winding-up, administration, or liquidation of the Company.
5. Selling, leasing, transferring, or otherwise disposing of the whole or a substantial part of the undertaking, property, or assets of the Company.
6. Incurring any capital expenditure, borrowing, or financial indebtedness exceeding [Dollar Amount / £Amount] outside the ordinary course of business or approved annual budget.
7. Appointing or removing the Company's auditors or changing its accounting reference date.