Shareholder agreements

[poshgaffer]

Hello,

I am currently a sole-trader recruitment consultant going through the process of setting up a Ltd Co. I am bringing in a director who will hold 25% of shares. I will keep 75%. What do we need to put into the agreement ?

Kind regards,

poshgaffer

 

[bwglaw]

You will not only need a Shareholders Agreement but a Director's Service Agreement.

I cannot list what should be included because I would not advise anyone to attempt to draft it themselves.

The agreements should be drafted by a professional with a high degree of objectivity amongst other things.

Jonathan

 

[poshgaffer]

Many thanks for your contribution. I think however that we do need a shareholders agreement as my future director will need to protect his ability to make key decisions in the business, eventhough he only holds 25%. We have already appointed a solictor but I simply wanted to prepare in advance to avoid very high costs.

Kind regards,

poshgaffer

 

[bwglaw]

As you have a solicitor on board it would be wise to take advice from him/her. Some solicitors will do the agreements for a fixed fee.

From what you have said a Director's Service Agreement will be needed also to govern the decision-making relationship in his role as Director.

The shareholders agreement will be more about his role as a shareholder and does not necessary include clauses on decision-making since shareholders appoint Directors for this purpose.

I suggest you put the question to the solicitor so he/she is aware of what you are seeking.

Jonathan

 

[lawspeed]

I would echo Jonathan's sentiments above, you must ensure that different agreements are set up for the two different capacities in which this individual will be acting.

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