When forming or operating a private limited company, there are a number of steps that can be taken in order to protect yourself and the other parties involved. Perhaps the most effective step is the implementation of a shareholders’ agreement that is suitably tailored to your business. 

What is a Shareholders’ Agreement? 

A shareholders’ agreement is a private contract made between a company and its shareholders that sets out how the company should be operated. It may be entered into at any time of a company’s life cycle, not just on incorporation of the company or where a new shareholder joins.

Why have a Shareholders’ Agreement? 

There is no legal requirement for a shareholders’ agreement. However, we would recommend that one is adopted for any company with more than one shareholder for the following reasons: 

The above list is not exhaustive, and there will be other advantages available depending on whether you are a majority shareholder, a minority shareholder or an investor. In our view, a relatively small investment in terms of legal cost is most definitely worth the benefit of certainty and protection that a shareholders’ agreement provides. 

For more information, get in touch with the Pannone Corporate team on 0800 131 3355 or via the contact form.

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