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
- 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.