Why choose Talbots Law for your partnership and shareholder agreements?

One of our core values is listening, and this quality is vital for creating and drafting partnership and shareholder agreements.  We know that every business is different and we will collaborate with you to ensure your vision and goals for the company are incorporated into your agreements.  But more importantly perhaps, we will ensure that the partnership or shareholder agreement does not hinder your ability to execute those ambitions. Drafting legal documents is all about feedback.  We value our clients’ input and work with them to develop agreements that benefit their business and provide a framework for how the business will be run, avoiding costly disputes and disagreements.

Partnership agreements

It will almost always be advisable for partners to enter into a partnership agreement in order to avoid application of any inappropriate default provisions in the Partnership Act 1890 or to supplement the statutory provisions where they are insufficient. For example, under the Partnership Act 1890, all partners are to share equally in the capital and profits and contribute uniformly to losses.  This may be inappropriate for your partnership set-up, as some partners may have contributed significantly more capital than others.  By drafting a partnership agreement, you can decide how profits and liabilities will be shared.

Shareholder agreements

Our Corporate & Commercial Team will draft a clear, comprehensive shareholders’ agreement for your company.  We will ensure that there is a clear dispute resolution clause so disagreements do not result in deadlock.  We will also include details of a transparent dividend policy, details of how directors can be appointed, levels of borrowing and consent matters.

Factors to be considered in a shareholder agreement include:

• Fair value for shares;
• Dividend policy;
• Introduction of capital;
• Good/bad leaver;
• Provision for tag and drag on sale;
• Pre-emption.

LLP agreements

These are similar to partnership agreements but regulate a limited liability vehicle.  They avoid LLPs falling into the default provision for LLPs.  A properly drafted LLP agreement will regulate essential terms including the admission and withdrawal of partners.

Partnership and shareholder agreements FAQs

What happens if a written partnership agreement or LLP agreement is not put in place?
Failing to prepare a partnership agreement increases the likelihood of disputes between the partners, and can make it more difficult to resolve them.

Also, without a partnership agreement, under the Partnership Act 1890, a partnership ends when one partner gives notice of his wish to leave the partnership, or if a partner should die.  This could result in the end of a profitable, thriving business.  Having a formal contract in place prevents the uncertainty arising out of such an event.  Similar provisions apply to LLPs.

What are pre-emption rights in a shareholder agreement and do I need them?
Pre-emption is a right of first refusal in favour of existing shareholders in relation to the allotment of new shares or the transfer of shares from one shareholder to another.  It allows shareholders to preserve their percentage shareholding in a company, provided they have sufficient funds available to acquire such shares when they are offered. They can prevent the admission of a third party into the shareholding structure.

To talk to one of our Corporate & Commercial Team at Talbots Law, please phone us today on 0800 118 1500.