Shareholders’ or Partnership Agreement

The essential tool for safeguarding your business interests.

As a business owner, your business can be your greatest asset and your greatest responsibility. So, keeping your business interests safe, for the long-term benefit of yourself and your family, is a big priority.

Running a business with a colleague, either as shareholders in a limited company, or as partners, has its own challenges. Lots of people go into business with colleagues they know, like and trust. But the pressures of running a business can strain even the strongest friendships to breaking point. And what if something happens to one of you? Will that spell the end of the business? And what will your family and dependents do then?  

A Shareholders Agreement or Partnership Agreement is an essential tool, that provides you and your business partner with a vital safety net. It’s one of the Four Pillars of Wisdom for a resilient business.

How it Works

With a Shareholders Agreement or Partnership Agreement in place, you can: -

• Define how your business is organised;
• Agree what decisions you can make individually and what decisions are so important that you must make them together;
• Insist on accounts and financial projections being maintained, to safeguard the financial health of the business;
• Create a mechanism for valuing, transferring and selling your shares, either to each other or to someone else, if one or both of you decides to sell up, or one of you buys the other out;
• Decide what will happen to the company if one of you dies, or is seriously ill or injured;
• Agree how the business can be split up in an orderly and non-destructive manner if you fall out;
• Create a procedure for issuing additional shares if new business partners join you;
• Provide yourselves additional protection if you give personal guarantees on your business borrowings;
• Decide on a cost-effective mechanism for resolving disagreements

What It Achieves

This gives you the peace of mind of knowing that you have thought about the big risks that can affect your business and your working relationship, and have put sensible protections in place to manage those risks.

From an estate planning perspective, it gives your colleagues the option to buy out your share of the business for a fair market price if something happens to you. This can be backed up with a suitable insurance policy that provides the purchase price for your share should disaster strike. That way, the business can continue to trade uninterrupted, while you and your family have the security of having your capital in the business converted into cash.

A Shareholders Agreement or Partnership Agreement costs £965.