Precautionary steps that protect you and your future…
If you are forming a company and want to ensure that you are fully prepared for every eventuality then you should seriously consider having a Directors and Shareholders agreement put in place. If in the future things should not go to plan, you will have the comfort of knowing that there is a clear and unambiguous process to follow which will save you an awful lot of time, effort and money. The substantial costs of litigation alone can be daunting should a dispute arise.
Caunters have a great deal of experience in looking after our Business clients. We work closely with you to ensure that we fully understand your requirements and then we draft an agreement that is tailored specifically for your needs.
How Directors and Shareholders Agreements work
A company is a separate legal entity usually limited by shares. The company is owned by the shareholders and their liability is limited to the amount unpaid on the shares.
The company will employ directors and the power to take decisions on behalf of the company is divided between the directors and shareholders. The powers of directors and shareholders are set out under the Companies Act 2006. In small private companies the shareholders are often the directors.
A shareholders agreement will regulate the relationship between shareholders in connection with the company’s affairs and provide protection to shareholders should thinks go wrong. The articles of association is the constitutional document of a company and should not conflict with the shareholders agreement which is a private document.
In the absence of a shareholders agreement any disputes between shareholders will be resolved by reference to the articles of association. This may not provide an acceptable solution and may not offer a shareholder adequate protection.
There are further matters which may be included in these agreements such as the following:-
- The appointment and removal of directors;
- The protection of minority shareholders from decisions of the majority so that crucial decisions require unanimous approval;
- The restriction of freedoms on the disposal of shares and pre-emption rights for remaining shareholders;
- Restrictions on changing the nature of the business;
- Regulating the raising of capital;
- Dividend policy;
- Limitations on directors’ freedom of action.
For more information on how Caunters can look after your Business interest call Liskeard (01579) 343165