Investment/Shareholder agreements

Businesses are often set up by two or more individuals, or at some stage in their development need an injection of capital from an investor. It is crucial for all concerned that their relationships are well documented, as failure to understand each shareholder's expectations is a common cause of the breakdown in relations between owners. It is therefore essential that a shareholders or investment agreement is put in place to regulate the relationships between the owners. For example:

  • When can one of the shareholders leave the business?
  • If they do leave, what happens to their investment?
  • Can one of the shareholders be required to leave by the rest?
  • What happens if one party wants to sell his shares? It is common to require him or her first to offer the shares to the other shareholders, but at what price?
  • What about where there is a possible trade sale or flotation, but one of the shareholders does not wish to participate - can he/she be forced?
  • Can shareholders have outside business interests, whether in competition or not?
  • What are the key decisions for which unanimity is required?
  • What happens if agreement cannot be reached on a particular matter?
  • What happens if relations break down completely? How can the shareholders get out without losing everything?

For more information, please contact Justin Ellis.