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Shareholder Agreements

While it is not a legal requirement to have a Shareholders’ Agreement in place, it is best practice to document the rights and responsibilities of shareholders formally.

Investors increasingly want to see evidence of environmental, social, and governance (ESG) compliance and accountability in companies they plan to invest in. A Shareholders’ Agreement, among other governance documents, provides confidence that your organisation has solid management and is well-run.

Our lawyers are registered with the UK Solicitors Regulation Authority (SRA) and the Dubai Legal Affairs Department. We have over ten years’ experience in drafting and negotiating Shareholder Agreements.

A well-drafted Shareholders’ Agreement provides a framework for directors, providing processes and procedures applicable to specific situations such as granting shares to employees.  Shareholders also have an accessible reference for matters such as selling shares to third parties and the rights of minority shareholders.

What is a shareholders’ agreement?

A Shareholders’ Agreement is a contract between the shareholders of the company.  A Shareholders’ Agreement can include policies and procedures relating to the:

  • financing of the company
  • management of the company
  • dividend policy
  • transferring of shares
  • deadlock situations
  • valuation of the shares
  • disputes between the company and its shareholders
  • rights of minority shareholders

A Shareholders’ Agreement is a private document; therefore, it does not have to be registered with any government department.  However, as a legally binding agreement, its terms are enforceable in Court.

Why should I have a shareholders’ agreement?

Many companies hope that the goodwill and trust that exists between the shareholders will result in disputes being avoided.  However, trust and cooperation can break down if an unexpected event occurs, the company changes strategies without the full backing of all stakeholders, or the business experiences financial difficulties.

An example of how a Shareholders’ Agreement can mitigate the risk of disputes can be clearly seen in a situation where a shareholder wishes to sell their shares.  The Shareholders’ Agreement will provide a framework for the sale process, how the price is calculated, and to whom the shares may be sold.  Without an agreement in place, conflicts over one or all of these matters can quickly erupt.

Our corporate law team will advise you on the terms of your Shareholders’ Agreement and draft a bespoke document which fits the needs of your unique business.  You can be confident that we will not merely provide standard terms – we will take the time to understand your business and commercial ambitions and draft a Shareholders’ Agreement that helps you achieve your objectives.

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