The importance of shareholders' agreements when things go wrong
- AuthorEleanor Waters
COVID-19 business disruption opens up the potential for disputes and disagreements between shareholders and directors. In the event that ‘things go wrong’, it is important that companies have a clear process to follow and a legally binding agreement to rely on.
If you are a shareholder of a private limited company impacted by COVID-19, you should consider protecting your interest by entering into a shareholders’ agreement. Without one, a minority shareholder (owning less than 50% of the shares) will have little control in the running of the company.
The agreement can be drafted to take precedence over the standard Articles of Association held at Companies House and can be entirely bespoke to fit the individual needs of the shareholders.
It could be the only thing that saves your business if a dispute arises.
If you require further guidance on shareholders' agreements, please do get in touch.