A shareholders agreement is a contract between the owners of a company that defines their roles, rights and obligations as shareholders in the company wherein it specifies the appointment of managing shareholders, creates rules for appointing and terminating company officers and sets out requirements for board and shareholder meetings, shareholder duties, entitlements and rights to information and dividends.
Shareholders agreement is the best way to prevent conflict and protect the interest of the shareholders and it is the best way to ensure stability and continuity of the operations of the company in case of a dispute and conflict. Unlike the Articles of Association, Shareholders Agreement is a confidential document which covers key issues such as company administration, the company’s officers, new share issues, day-to-day management, decision making and leaving shareholders. It is highly imperative for the shareholders to put a shareholder agreement in place at the earliest possible or as soon as first shares are issued.
Speak with one of our friendly experts and find out how we can help you save tax, reduce admin and file with HMRC.
Invalid value
Submitting your details indicates that you are happy for dns to contact you about relevant services and offers. You can unsubscribe at any time.
A shareholders’ agreement is an agreement between the shareholders of a company and it can either be between all or some of the shareholders, for example, the holders of a particular class of share. The main aim behind having a shareholders’ agreement in place is to protect the investment of shareholders in the company while maintaining a fair and healthy relationship between the shareholders and to govern the normal operation and run of a company.
Company’s Articles of Association does have a provision to protect the interest of the minority shareholders, in general practice, without having a shareholders’ agreement in place, they don’t have much of a say in the major decision making of the company. In case you are a minority shareholder and have a shareholders’ agreement in place which includes the requirement of all shareholders to consider and approve certain decisions, ensures that you do have a say in the important decisions concerning the company.
In case you are a majority shareholder, i.e. if you hold most of the shares of the company, and want to sell your shares but a minority shareholder is unwilling to agree then in this case, having a provision in the shareholders’ agreement is important. This is also referred to as a “drag along” provision.
Apart from this, shareholders’ agreement helps in handling various other issues like where one of your fellow shareholders want to transfer their shares to anyone, which could cause problems for you and the other shareholders, especially if the sale is to a competitor or someone else you do not want to get involved in the company and its affairs.
To overcome and handle situations like these, shareholders’ agreement will often include rules around share sales and transfers i.e. shares can be transferred to whom, on what terms and at what price.
What all you can ask to include in a shareholders’ agreement depends on your level of shareholding and the number of your fellow shareholders.
A share certificate is a certificate issued by a company which certifies that on the particular date the certificate is issued, a certain person is the registered owner of the shares of the company and it holds following key information:
In terms of the Companies Act 2006, it is considered prima facie evidence i.e. sufficient evidence unless the contrary is shown in Scotland of the member’s ownership of shares in the company. A share certificate can be issued by a company however it is its entry in the register of members that provides legal proof of ownership of shares in the company. So, one needs to refer to the register of members to make sure that the share certificate and entry in the register of members is consistent.
Unless mentioned in the company’s Article of Association otherwise, a share certificate needs to be issued within the legal time for issuing the same, which is two months. Once you register your company, company share certificates must be issued to its shareholders within two months and it is usually done as a part of the first board meeting.
A company must thereafter, within two months of allotting shares, issue the share certificate representing those shares and two month time. A share certificate is issued to the registered shareholder and it is not mandatory to send its copy either to the Companies House or Her Majesty’s Revenue & Customs (HMRC).
Before a share certificate is issued, it is important to check the company’s Articles of Association for any specific requirements which need to be mentioned in the certificate. Generally it is a standard practice to issue one share certificate for the shares issued at a particular time, unless requested by the shareholders for the separate ones. In case of a joint shareholding, it is good to include the name of each separate holder on the certificate.
It is highly mandatory of a share certificate to be dated on its issue and the key points that should be included as part of a share certificate template is as below:
The main document that governs any or all significant sale of shares in a limited company is commonly called as a Share Purchase Agreement or SPA, also called or known as Share Sale Agreement. The terms and complexity of the SPA will vary depending on the nature and circumstances of the transaction, but typically, it is a lengthy document, wherein half or more of it can be devoted to a schedule of warranties. A share sale agreement is normally drafted by the sellers’ solicitors because it has to be on the seller’s terms and conditions and the prospective buyers are then asked to make their offer based on the pre-prepared contractual documentation, although the terms and conditions mentioned in the Share Sale Agreement can be further negotiated with a potential buyer.
Share your details in the form below and one of our friendly experts will be in your touch to give you a free consultation
Get the best advice on tax savings, accounting services, payroll, self assessment, VAT and more, whether you want to call us directly, request a call back or chat online with our experts, rest assured that we will always give you the best advice.If you have any questions, or would like to speak to us in person, please do get in touch. We're here to help.
dns accountants DNS House, 382 Kenton Road, Harrow, Middlesex, HA3 8DP
03300 886 686
enquiry@dnsaccountants.co.uk
We're proud of our clients and their success. Find out more about them andthe help and support we provide.
“I recently started my own company and in need of a good accountant. With my friends reference, I started dns accountancy services and I am a quite satisfied with their service. My account manager Sneha Gurudutta was always responsive and guided me a lot especially during my company early days. Keep u the good work.”
“I have been dns for the last 3 months and I am very happy with the service. My account manager Sneha Gurudutta guided me and helped me with all the major/minor steps with the account setup. The weekend support they provide is really helpful. I would definitely recommend dns to all my friends.”
“Unfortunately my son passed away without leaving any contact name of his accountant. I was able to make contact with the firm through HMRC. The staff were very prompt, caring and supportive in settling his income tax account. I was extremely impressed with the efficient caring and supportive service received from all of dns staff.”
“Been with dns Accountants for more than a year I would highly recommened their services. My account manager Sneha has been very helpful and helped with accounts and queries swiftly always! Having a good accountant means you can fully focus on your business, not worry about accounts and tax matters. Thank you dns :-)”
“I have been extremely satisfied with the service I have been receiving close to past 1 year. Very professional, transparent and helpful. Special mention of my Account Manager Minakshi Arora who made my transition very smooth and always ready to go that extra mile to support and make customer happy. Definitely recommended.”
“I've recently set up a Ltd. Company and signed up with dns for my accounting services. I've found it very good value for money and hugely helpful in terms of advice and guidance. I have a named Account Manager, Sneha Gurudutta, who keeps in contact with me and offers advice on line and on the phone... I'm really pleased with the service.”
Limited time only!
Say Goodbye to Bookkeeping Hassles: Nomi offers Free Receipt Processing and big savings!
Small Business
Business Start Up
Contractors
Freelancers
Landlords
Sole Trader
Construction Industry
Accounting
Bookkeeping
Payroll/Auto enrolment
Self-Assessment
VAT Returns
Year End Accounts
Accounting Software
Tax Advisory
Find a Professional
Business Recovery & Company Closures
IR35 Review
R & D Tax Credit
Seed Enterprise Investment Scheme (EIS/SEIS)
Tax Planning
Special Purpose Vehicle SPV
Corporate Advisory
Business Support Services
Business Insurance
Business Plan
Management Accounts
Company Formation
Tax Investigation Cover
Free accounting software
Virtual finance office
Our Story
Achievements
Charities
Blogs
Webinars
Newsletters