Shareholders’ Agreement UK
What is a Shareholders’ Agreement and what does it do?
A Shareholders’ Agreement is a contract entered into and signed by shareholders of a Company, for the purpose of providing better internal governance and heightened clarity around expectations to both shareholders and directors. Although it is optional for shareholders to enter into, if a Shareholder Agreement is put in place, it can give enhanced legal remedies to aggrieved shareholders.
Shareholders’ agreements provide a particularly good foundation for many Start-ups, and allow give you the peace of mind to focus on growing and scaling your Start-Up.
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Who is a Shareholders’ Agreement For?
- Shareholders of a company
- Business partners
- Angel investors
- Founders
- Minority Shareholders
- Start-ups
- Executive directors
What are the benefits of a Shareholders’ Agreement?
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- Clarity – it is important that you have a document which governs the relationship between co-shareholders and particularly how you will make important decisions relating to the Company, including management of the Company and appointing directors in the face of disagreement.
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- Privacy – while much can be contained in the Articles of Association (a publicly-available document), there may be sensitive internal matters which you do not wish to disclose to the public. Shareholders’ Agreements are a way for you to keep your privacy and protect your business.
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- Protection – There may be many times where shareholders disagree about a course of action or even the direction of the Company. During such times, it is vital that you have an internal dispute resolution system to manage disagreements. A Shareholders’ Agreement is the place for this procedure to be documented.
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- Peace of mind – At some point, you or your co-shareholders may exit the Company. At this point, it is important that you have reference to the formal procedures and processes which must be followed, including who buy the shares and how to value the shares. This is important to get right the first time.
How do I get started?
- We’ll ask you to sign and return our Client Care Letter and to place monies on account.
- Depending on your availability, we’ll schedule a call within 7 working days, to take your instructions and learn about your business.
- We’ll aim to provide you with a first draft 7 workings days after taking your instructions.
- Once we receive your feedback, we’ll send you a final version of your Shareholders’ Agreement, ready for your partners to rely on.
How long does it take to create a Shareholders’ Agreement?
We can create a basic Partnership Agreement within 7 working days of you giving us instructions. If your Partnership Agreement is more complex, then it would take longer for us to prepare a first draft.
Review
- Review an existing Agreement
- Provide a legal opinion and summary of key clauses
- No amendments
Negotiate
- Review an existing Agreement
- Make amendments to the document
- Correspond with the other party’s solicitors
Create
- Create a new Agreement
- We’ll prepare a first draft for you to review and provide feedback
- We’ll incorporate any amendments and provide you with a second and final version.
OUR FIXED FEES
Quotations are confirmed in writing before work begins. Fees depend on complexity, the number of parties and turnaround required.
| Tier | What it covers | Approximate Timeframe | Fixed Fee |
|---|---|---|---|
| Review | Review of your existing Shareholders’ Agreement, report with prioritised risk table and suggested amendments | 7-14 days | From £500.00 |
| Bespoke Draft | New Shareholders’ Agreement drafted from scratch for your business, plus one round of amendments | 2-3 weeks | From £875.00 |
| Negotiation | Multi-party or heavily negotiated agreements, ongoing negotiation support to signature | Upon enquiry | Upon enquiry |
Shareholders’ Agreement FAQs
How much does a shareholders’ agreement solicitor cost?
Solicitors typically charge £250–£500+ per hour, so a shareholders’ agreement from a traditional firm often lands between £2,000 and £5,000+. Pacific Law offers a different model: a fixed fee from £1,500 for a standard SME agreement, agreed before any work begins.
Do I need a solicitor to write a shareholders’ agreement?
There’s no legal requirement to use a solicitor, and free templates exist online. But a generic template won’t anticipate deadlock, leaver provisions or valuation mechanics specific to your company — and the first time you test it may be in a dispute. A professionally drafted agreement costs a fraction of litigation.
Is a shareholders’ agreement legally binding?
Yes. Once properly executed, a shareholders’ agreement is a binding contract enforceable between the parties who signed it. Poorly drafted agreements can contain unenforceable clauses, which is another reason professional drafting matters.
Can I write my own shareholders’ agreement?
You can, using a template — but templates rarely fit your actual shareholding structure, and errors in cross-options, pre-emption or leaver clauses can be catastrophic. Most disputes we see arise from template agreements that didn’t fit.
Can a shareholders’ agreement be changed later?
Yes — by a deed of variation signed by all parties (or as the agreement itself permits). Many agreements include amendment provisions requiring majority or unanimous consent.
What happens if a shareholder dies?
Without provisions, the deceased’s shares typically pass to their estate — meaning an heir (or an ex-spouse via divorce settlements) can become a fellow owner. A well-drafted agreement forces executors to offer the shares to remaining shareholders at a fair valuation.
Can a shareholder be forced to sell their shares?
Not simply for wanting out — but agreements commonly include compulsory transfer (“bad leaver”) provisions triggered by breach, misconduct or insolvency, and drag-along rights that compel minority holders to join a genuine sale of the company.
What’s the difference between a shareholders’ agreement and articles of association?
The articles are the company’s public constitution filed at Companies House, binding the company and all shareholders. The shareholders’ agreement is a private, flexible contract between owners covering matters the articles don’t — exits, deadlock, dividends, restrictions. Most companies need both.
How long does a shareholders’ agreement take to draft?
For most SMEs, we deliver a first draft within 7 working days of taking instructions. Investment-grade agreements with multiple share classes take longer.
Are you regulated solicitors?
No. Our lawyers have all qualified as solicitors of England & Wales, with decades of experience between them, however Pacific Law is an unregulated legal services provider, not authorised or regulated by the Solicitors Regulation Authority. Drafting shareholders’ agreements is an unreserved legal activity we are fully permitted to provide — with lower overheads and fixed, transparent fees.