Shareholder and LLP Agreements

Shareholder and LLP Agreements are confidential private agreements between the shareholders of a company or members of a Limited Liability Partnership (LLP).

Why do I need one?

  • To set out an agreed framework for matters that are not covered in the constitution i.e. management and decision-making, dispute resolution, exit strategies and remuneration. This helps to avoid costly and prolonged disputes at a later stage.
  • To protect the other shareholders or members if someone dies or becomes critically ill.
  • To enable certain matters to be kept confidential. It does not need to be filed at Companies House and protects minority shareholders’ or members’ rights.
  • It is advisable to enter into an agreement at the outset. It can be very expensive and time-consuming to resolve issues that arise at a later date without pre-agreed terms.

What do they cover?

From the simple to the very complicated, they may contain provisions dealing with:

  • Initial funding and further financing of the company/LLP
  • Dividend and remuneration policies
  • Exit strategies
  • Death/critical illness of a shareholder
  • Divorce of a shareholder/member
  • Restrictive covenants
  • Ownership of intellectual property rights
  • Confidentiality obligations
  • Decision-making
  • Mechanisms to deal with deadlock situations

Why do I need a solicitor to help me draft these?

  • A solicitor can help you consider the issues you may face and resolve what should happen in each scenario.
  • There is rarely a standard document. Every business has different and changing needs and will require specifically tailored provisions.

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