Picture the scenario:  you are a shareholder in a company, with two other shareholders.  Shareholder A sells his shares to Shareholder B and with the proceeds of sale sets up a competing business, poaching key employees and customers of the company.  As for Shareholder B, he now has majority control of the first company and a different idea to you of the direction that it should go in.  Suddenly the business that you helped to grow and maintain is out of your control.

This illustrates just a few of the reasons that you should have a shareholders agreement, which can help to ensure that you will not face such difficulties.  In this hypothetical scenario, relevant provisions in the agreement could have included pre-emption rights which would apply when a shareholder intends to transfer shares and restrictions on a former shareholder soliciting customers and employees.

A shareholders agreement can also deal with many other issues including succession, dispute resolution, and minority protection.

Don’t lose control. To discuss this in more detail please contact Tom Swindells or Keith Hardington on 01756 700200 or ts@walkerfoster.com / kh@walkerfoster.com