Shareholders' Agreement Template UK

A Shareholders’ Agreement sets out how you will run and manage your company. It outlines shareholder rights, decision-making rules, and procedures for buying or selling shares.

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Last Update 25 November 2025

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Table of Contents:

What is a Shareholders’ Agreement?
Shareholders’ Agreement Sample: PDF & Word
Shareholders’ Agreement key points and terms to include
Difference between a Shareholders' Agreement and Articles of Association
Shareholders’ Agreement FAQs

What is a Shareholders’ Agreement?

A Shareholders’ Agreement is a private legal contract between a company’s shareholders. It sets out:

How the company operates
Who owns what percentage
How major business decisions are made

This legal document complements the Articles of Association. It clearly defines shareholder rights and responsibilities, which can help prevent possible future disputes between shareholders.

It’s especially useful for private limited companies or startups with multiple owners.

A Shareholders’ Agreement typically covers:

Ownership structure and voting rights
How shares can be issued or transferred
Dividend and profit distribution
Decision-making procedures
Dispute resolution methods

Creating this document early can protect your investment and provide transparency among all shareholders.

Who should enter into a Shareholders' Agreement?

A Shareholders’ Agreement is suitable for most private companies with more than one shareholder. It’s particularly important when ownership or management responsibilities are not shared equally.

Here’s a quick table showing the different situations in which you may have to sign this agreement.

Situation	Why it’s appropriate
Starting a new company with partners	Defines each shareholder’s contribution, ownership, and voting rights.
Bringing in investors	Protects both founders and investors by setting out rights and exit options.
Family or small business	Prevents conflicts by setting clear boundaries between personal and business interests.
Employee shareholders	Clarifies ownership and what happens if an employee leaves the company.
Startup or growing company	Establishes fair procedures for raising capital and transferring shares.

Shareholders’ Agreement Sample: PDF & Word

Here is an example of a Shareholders’ Agreement. You can use it to get an idea of how to structure your document:

PDF WORD

Shareholders’ Agreement key points and terms to include

Under UK law, a Shareholders’ Agreement is governed by contract law and the Companies Act 2006. It must align with the Articles of Association and be signed by all shareholders.

It should include the following clauses:

Company and shareholder details: Full legal names, shareholdings, and the company’s registered number.
Share capital and structure: How shares are divided, types of shares, and rights attached to them.
Management and voting rights: Rules for appointing directors, voting procedures, and reserved matters requiring special approval.
Transfer of shares: Steps for selling, gifting, or transferring shares. Typically, the document includes pre-emption and valuation methods.
Dividend policy: How profits are distributed among shareholders.
Exit provisions: Tag-along and drag-along rights to protect both majority and minority shareholders.
Confidentiality clause: Prevents disclosure of sensitive company information.
Dispute resolution: Explains how disagreements are handled. This often done through mediation before court.
Governing law and jurisdiction: State if your jurisdiction is England and Wales, Scotland or Northern Ireland. There are slight variances across these jurisdictions.
Execution and signatures: Signatures of all shareholders, witnesses, and company officers. You only need witnesses if the document is being executed as a deed.

You can add more terms based on your personal situation. For example, you may want to include clauses about funding obligations or intellectual property ownership.

Please note that your Shareholders’ Agreement cannot override the minimum rights established in the Companies Act. Any clauses you include that do override these minimum rights will be considered invalid.

You can quickly create a Shareholders’ Agreement that includes all standard clauses with the help of our template.

Difference between a Shareholders' Agreement and Articles of Association

A Shareholders’ Agreement is often confused with the Articles of Association. The two documents serve different purposes but work together to govern your company.

Below are some of the differences between these two documents.

Aspect	Shareholders’ Agreement	Articles of Association
Nature	Private contract between shareholders.	Public document filed with Companies House.
Purpose	Regulates ownership, voting, and transfers.	Sets out company’s internal management rules.
Confidentiality	Not available to the public.	Accessible by anyone through Companies House.
Enforceability	Enforced under contract law.	Enforced under company law.

Why have a Shareholders’ Agreement?

Having a Shareholders' Agreement contract gives all parties legal clarity.

It helps guarantee that:

Each shareholder knows their rights and obligations
The company can operate even if disputes arise
Shareholders can exit or sell shares fairly
The interests of minority shareholders are protected

Without one, you rely only on statutory rights under the Companies Act 2006. These rights may not cover your specific situation. This is why it’s so important to draft a custom Shareholders’ Agreement.

Shareholders’ Agreement FAQs

Below are some common questions about creating and maintaining a Shareholders’ Agreement.

What happens in case of breach of a Shareholders' Agreement?

If a shareholder breaks the Shareholders’ Agreement, the other parties can take legal action. For example, they can ask for damages or request an injunction to stop the breach.

The agreement may also include specific solutions, like requiring the shareholder to transfer their shares or buy them out. Before enforcing any penalties, it’s important to get legal advice.

Can a Shareholders' Agreement be modified?

Yes, you can change the details of a Shareholders’ Agreement if all shareholders agree to the changes in writing.

These changes must be signed and witnessed to be valid. This allows the document to adapt as the company grows or ownership changes.

You are only a few steps away from your own Shareholders Agreement!

Download our professional examples

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Preview of your Shareholders' Agreement

SHAREHOLDERS' AGREEMENT

THIS SHAREHOLDERS' AGREEMENT made this ________ day of ________________, ________.

BETWEEN:

_________ of _________
("Party A")
and

_________ of _________
("Party B")

and _________, a company with its registered office at _________, England (the "Corporation")
("Party C")

(each a "Party" and together the "Parties").

(A) The Corporation is incorporated in England pursuant to the Companies Act (the "Act").

(B) The Act allows the Shareholders to enter into a written shareholders' agreement that may limit the directors' authority to manage the Corporation's business and affairs, and assign certain powers ordinarily held by the directors to the Shareholders.

(C) The Shareholders have agreed to enter into this agreement (the "Agreement") to set out their respective interests, responsibilities, liabilities, ownership rights in the Corporation, and to establish a framework for its effective governance.

(D) This Agreement has been executed by all of the Shareholders.

(E) The Corporation has executed this Agreement to acknowledge receipt of notice of its terms and, where required, to consent to and give effect to its provisions.

IN CONSIDERATION OF the foregoing and the mutual covenants and agreements contained in this Agreement, the adequacy of which is hereby acknowledged, the parties agree as follows:

Interpretation

1) In this Agreement

a. "Articles" means the Company's Articles of Incorporation or Articles of Amalgamation, as applicable;

b. "Fair Market Value" means the fair market value as determined by an independent professional appraiser appointed by the Corporation and paid for by the Corporation;

c. "Financial Statements" means the Corporation's financial statements prepared in accordance with generally accepted accounting principles;

d. "Share" or "Shares" means any share or shares in the capital of the Corporation;

e. "Shareholder" means any individual or entity who is, or subsequently becomes, a shareholder of the Corporation;

f. "Shareholders" means any two or more individuals or entities who are, or who subsequently become, shareholders of the Corporation.

Shareholders' Agreement

2) This Agreement governs the relationship among the Shareholders to the extent permitted by law. Where this Agreement requires an act to be carried out or a particular situation to be brought about by action of the Board, such requirement shall be interpreted as an obligation on the Shareholders to take all reasonable steps within their power to ensure that the act is carried out or the situation is brought about, and not as imposing any direct obligation on the Board to comply with this Agreement. This Agreement is not intended to limit the Board's authority to manage and oversee the Corporation, nor to constrain the discretion of any member of the Board.

By-laws and Articles

3) For the purposes of interpreting this Agreement and the Shareholders' rights and obligations under it, the By-laws shall be interpreted as being subordinate to the provisions of this Agreement.

4) For the purposes of interpreting this Agreement and the Shareholders' rights and obligations under it, the Articles shall be interpreted as being subordinate to the provisions of this Agreement.

Warranties

5) The Corporation warrants that it has the requisite corporate power and authority to enter into and fulfil its obligations under this Agreement.

6) Each Shareholder warrants that they are not prohibited by law or any contractual obligation from entering into this Agreement.

Corporate Governance and Management

7) The Board shall comprise a number of directors equal to the number of Shareholders, with each Shareholder having the exclusive right to appoint one director and to remove or replace their appointed director at their discretion.

Pre-Emptive Rights

8) Subject to the limitations on pre-emptive rights under the Act, any Shares issued by the Corporation shall be offered and issued in accordance with the following provisions:

a. The Shares shall first be offered to the existing Shareholders holding the same class of Shares being issued (the "First Offer") on a pro rata basis.

b. Any Shares not taken up under the First Offer shall be offered equally to the other Shareholders of that class (the "Second Offer") at a subscription price no less than that specified in the First Offer and on terms no more favourable than those offered under the First Offer.

c. Any Shares not subscribed for under the Second Offer shall be offered equally to all Shareholders of the Corporation (the "Third Offer") at a subscription price no less than that stated in the Second Offer and on terms no more favourable than those in the First Offer.

d. Any Shares remaining after the Third Offer may be offered to any other person or persons (the "Final Offer") at a subscription price no less than that specified in the Third Offer and on terms no more favourable than those in the First Offer.

9) The First Offer, Second Offer, Third Offer, and Final Offer (collectively and individually referred to as the "Offer") shall be made in writing and shall specify:

a. the subscription price at which the Shares are being offered;

b. the deadline for acceptance of the Offer, which shall be no less than 10 Business Days from the date the Offer is made;

c. the terms of the Offer; and

d. the closing date for the transaction, which shall be no earlier than 30 Business Days and no later than 90 Business Days from the date the Offer is accepted.

10) If the Offer is not accepted within the specified acceptance period, it shall be deemed to have been declined.

11) Shares will not be issued unless:

a. the subscriber is a party to this Agreement; or

b. the subscriber agrees to be bound by this Agreement and provides a written, legally binding undertaking to become a party to it.

12) Notwithstanding the foregoing provisions regarding the pre-emptive rights of existing Shareholders, no such rights shall apply to Shares issued as consideration other than money, as a Share dividend, or pursuant to the exercise of conversion rights, options, or other rights previously granted by the Corporation.

Dividends

13) Subject to corporate law solvency requirements, and to the extent permitted by law, after repayment of any shareholder loans and after setting aside adequate reserves for the ordinary operation of the Corporation's business and its debt servicing obligations, ______% of the Corporation's profits shall be distributed as dividends. Dividends shall be declared and distributed annually.

Notice of this Agreement on Share Certificates

14) All share certificates issued by the Corporation shall bear the following notice, or a notice in substantially similar form:

- The shares represented by this certificate are subject to the provisions of a Shareholders' Agreement, made the ________ day of ________________, ________, which restricts the right to sell, transfer, or encumber any share in the Corporation, including the shares represented by this certificate. Notice of said agreement is hereby given. A copy of the agreement may be obtained by submitting a written request to the Board of Directors of the Corporation.

Effective Date and Term

15) This Agreement shall take effect on the date it is executed.

16) This Agreement shall remain in effect until the earliest of:

a. the date set out in a written agreement signed by all of the Shareholders terminating this Agreement; or

b. the bankruptcy, winding-up, or dissolution of the Corporation.

Address for Notice

17) Service of all notices under this Agreement shall be sufficient if delivered personally or sent by certified mail, return receipt requested, with postage prepaid, to the following addresses:

- _________ of _________

- _________ of _________

- _________ of _________, England (the "Corporation")

18) Any Shareholder may change their address for notice under this Agreement by providing written notice to all other Shareholders and the Corporation. If the Corporation's registered address changes, the Corporation may change its address for notice by providing written notice to all Shareholders.

Severability

19) If any provision of this Agreement conflicts with the applicable governing legislation (the "Legislation"), the Legislation shall prevail, and this Agreement shall be deemed amended to the extent necessary to comply with the Legislation. Additionally, all provisions required by the Legislation are hereby incorporated into this Agreement.

20) If any provision of this Agreement conflicts with a prescribed form of agreement under the Legislation, the prescribed form shall prevail, and the conflicting provisions of this Agreement shall be amended or removed as necessary to comply. Any provisions required by the prescribed form are hereby incorporated into this Agreement.

21) If any provision of this Agreement is found to be invalid or unenforceable in whole or in part, the enforceable portion of that provision, together with all remaining provisions, shall continue in full force and effect as if the invalid or unenforceable part had been omitted and the Agreement had been executed without it.

General Provisions

22) This Agreement may only be amended or modified by written agreement of all the Shareholders. The Shareholders may, without the Corporation's consent, modify, amend, or rescind this Agreement.

23) This Agreement constitutes the entire agreement between the Parties and supersedes all prior agreements or representations concerning the matters addressed herein. There are no conditions, warranties, representations, or agreements, whether express or implied, relating to such matters other than those set out in this Agreement.

24) This Agreement shall be governed by and construed in accordance with the laws of England.

25) Headings are inserted for convenience only and shall not affect the interpretation of this Agreement. Words in the singular shall include the plural, and vice versa. Words in the masculine shall include the feminine, and vice versa. Words in the neuter shall include the masculine and feminine, and vice versa.

26) This Agreement shall inure to the benefit of and be binding upon the respective heirs, executors, administrators, successors, and assigns of the Parties, as applicable.

27) This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Facsimile signatures shall be binding and shall have the same effect as original signatures.

28) The Parties shall perform all acts and execute all documents reasonably necessary or desirable to give effect to the terms and intent of this Agreement, and each Party shall bear their own costs and expenses in connection therewith.

29) All monetary amounts referred to in this Agreement are in Pounds Sterling, and all payments made under this Agreement shall be in Pounds Sterling, unless otherwise agreed by the Parties.

30) No Party shall be liable for damages or entitled to terminate this Agreement due to any delay or failure in performance resulting from circumstances beyond that Party's reasonable control, including but not limited to acts of God, government restrictions, war, insurrection, or natural disasters such as earthquakes, hurricanes, or floods, or any other cause beyond the reasonable control of the affected Party.

IN WITNESS WHEREOF the Parties have SIGNED, PUBLISHED AND DECLARED this Agreement as a DEED on this ________ day of ________________, ________.

_____________________________
_________ Shareholder

_________ Corporation
Per:_________________________ (SEAL)