Implementation of such an agreement is often far from any idea when a new business starts, but it is preferable to get a shareholder pact from the outset, as views will diverge further, change circumstances and create resentment among shareholders, creating shaken differences of opinion about the company. Consider getting legal advice if you are unsure of the provisions to be included in which documents, but generally make sure that the association agreement and statutes are compatible. The agreement contains specific, important and practical rules for the company and shareholder relations. This can be beneficial for both minority shareholders and majority shareholders. While the relationship remains good and shareholders are able to agree among themselves, it is unlikely that a shareholder contract will be reviewed, but it can offer an important „standard position“ at a time when they are not on an equal footing. Since it is a private document, it is generally not necessary to submit it to Companies House, which means that its contents may remain confidential. The management of the company is usually left to the board of directors. However, shareholders may believe that there are certain decisions that should not be left to the discretion of the directors and instead require shareholder agreement. Especially when there are directors who are not shareholders.

No written agreement was reached on the structure of the company or on what would happen in certain circumstances, which meant that the brothers were not equipped to deal with the problem when it appeared. Our professionally developed shareholder pact model can be downloaded and adapted to your specific circumstances. You can buy our shareholder contract model online for your business. A clause that can protect the interests of minority shareholders is called the „day along“ clause. A „Tag Along“ clause means that if a majority shareholder wants to sell its shares, it can only do so if minority shareholders also have purchases for their shares. In other words, the majority shareholder can only sell if 100% of the shares are sold. This is in the interest of minority shareholders, as it means that the majority shareholder cannot sell its shares and cannot leave the company under the control of a person to whom the minority shareholders have not agreed. While a shareholders` pact is a tailored document, tailored to the specific needs of the shareholders and companies concerned, most shareholder agreements provide for the following provisions: We regularly advise shareholders and companies on shareholder agreements and we would be happy to have a free and non-binding chat with a reader who wishes to discuss how to help them. During the first honeymoon period of running a business, shareholders can move along and on the same side with respect to all important business decisions. The company can grow rapidly and it can even start to show a profit.