Partnerships and Shareholders’ Agreements

If you are in business with others, either in a partnership or a company, it is vital to have a robust partnership or shareholders’ agreement in place.

An agreement will set out the rights and responsibilities of the partners or shareholders and ensure that those involved know what is expected of them, what duties others will take on and how profits are shared. A sound agreement can go a long way to avoiding disagreements and misunderstandings.

We work with partnerships and small to medium-sized companies in drawing up comprehensive agreements that are tailored to unique requirements. We take time to understand our clients aims for the future, drafting the right document to support their long-term strategy.

Partnership agreements

Some partners will fail to make an agreement in the early days of their partnership. It is recommended to put an agreement in place as soon as possible to ensure each partner understands the limits of their powers as well as the obligations they have.

Key clauses in a partnership agreement include:

• How a meeting can be called
• How a new partner can be added
• How a partner can be removed
• How a partner can leave
• How disputes will be resolved
• How many partners need to agree on a decision
• How profits, losses and liabilities will be shared
• Non-compete clauses
• Ownership of partnership assets
• What hours will be worked
• What salaries will be paid
• Who will make decisions, including authorising borrowing

We can work with your partnership to draw up a bespoke agreement. We will also advise you on the type of partnership you are contemplating and whether a limited liability partnership would be advisable.

Shareholders’ Agreements

Shareholders’ agreements give company shareholders rights to limit company directors from taking certain actions and gives them more autonomy in significant decision-making. 

A balanced shareholders’ agreement will ensure that shareholders feel they can protect the company’s interests where necessary, but will also give directors enough flexibility to grow the business. 

Key clauses in a shareholders’ agreement include:

• Deadlock provisions
• Drag-along and tag-along provisions
• Good leaver and bad leaver provisions
• How disputes will be resolved
• How one shareholder can buy the holding of another shareholder
• Issues on which shareholders can vote
• Non-compete clauses
• Pre-emption provisions
• Prevention of the sale of shares as soon as they have been issued
• The right to subscribe for a new issue of shares
• The right to veto the issuing of new shares
• The rights given to shareholders