Do I need a shareholders’ agreement?

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I’m setting up a limited company with three shareholders. I’m doing this through a company formation site, and I have been advised by one of their customer service representatives that it might be worthwhile drafting a shareholders’ agreement. It sounds great, but I’m kind of in a rush to get this business off the ground. Does anybody know whether I actually have to write a shareholders’ agreement?

Answers

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You do not have to draw up a shareholders’ agreement but it is an essential consideration if you plan to own a company with other people because it will minimise the potential for any misunderstanding or disputes between shareholders in the course of business.

A shareholders’ agreement is simply a private document that is intended to protect the rights of each shareholder and outline the way in which decisions should be made. The articles of association does include provisions on such matters, but only in very broad sense. It is therefore advisable to further clarify shareholders’ rights and company management procedures in an official agreement.

a year ago
 

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