Shareholders agreement for Scotland

Who will use these documents:
SC-CP101 is for a situation where two or more shareholders are forming a new company to work together in any business. All are probably directors. Shareholdings may be different. One or more may work part time or not at all.

SC-CP102 is for a situation where one or more shareholders own an existing company and they are joined by a new shareholder or where existing shareholders simply decide the time has come to set down their relationships for management and control.

SC-CP103 is for a situation where two or more shareholders are forming a new company to work together in any business. All are probably directors. Shareholdings may be different. One or more may work part time or not at all. Some shares, probably a minority, are also to be owned by a major lender, who may be a bank or an individual. This person has no role in the day to day administration of the company but is concerned to make sure that the company is operated within a set of acceptable “regulations”. This will include the provision of timely reports and appropriate accounts. This document will be used most frequently for the occasion of a lender providing capital to the business and taking a shareholding as part of the whole package. This is likely to be the lender's document as it is he who will see himself as needing the protection from the pre-existing shareholders.

SC-CP104 is for a situation where one or more shareholders own an existing company in any business. All are probably directors. Shareholdings may be different. One or more may work part time or not at all. They are joined by a new shareholder who is also a major lender. He may be a bank or an individual. This person has no role in the day to day administration of the company but is concerned to make sure that the company is operated within a set of acceptable “regulations”. This will include the provision of timely reports and appropriate accounts. This document will be used most frequently for the occasion of a new lender providing capital to the business and taking a shareholding as part of the whole package. It is likely to be the lender's document as it is he who will see himself as needing the protection from the pre-existing shareholders. This agreement may also be used when one existing executive shareholder retires to become non-executive, or for other reasons decides to secure his position as a major lender to a company which has become controlled by others.

SC-CP105 is for a situation where two or more shareholders are forming a new company to work together on a project which may be of any length, but is intended to have an end date. This may be a project to develop a property, engage in property dealing, set up a website for sale, or buy a company specifically to sell off its assets. The shareholders may or may not be directors. Their contributions by way of loans may be different. One or more may work part time or not at all. One may be a “hands off” lender.

SC-CP106 may be best suited to a family situation where an executive director retires but remains a shareholder, perhaps to avoid inheritance tax on his death, and still wants to know that his interest is safe. This may include the provision of timely reports and appropriate accounts. This is a short form agreement which does not include the valuation letter to accountants because it may suit the family best if there is some “flexibility” in the basis of valuation. Neither are provisions included for buyout of shares of a shareholder leaving. It is assumed that the family will make their own arrangements in that regard. The agreement is concerned principally with the nitty gritty of day to day control and operation.

SC-CP110 - the warranties - are intended to be used only in a lending situation, to protect the lender. They are not relevant to an agreement which does not involve a loan. The document includes the text for addition to the shareholders agreement which introduces the warranties in a schedule. Around 85 warranties are provided, but you may find only 50 are relevant to the type of business with which you are concerned. Of those, only 10 or 20 are of sufficient importance to you to be included in the agreement.


Key features:

• comprehensive templates - delete what you do not need;
• define actions where shareholder consent is required;
• limit the freedom of executive director or majority shareholders;
• use of plain English.
  

These documents (except CP106) include provisions for:

• subscriptions for shares (new companies only);
• who shall be directors;
• company's obligations;
• actions for which shareholder consent is required
• new intellectual property;
• alternative end games / exit scenarios;
• transfer of shares and right of pre-emption with full procedure;
• matters following transfer;
• transfers of shares on death;
• conflict with the articles;
• provision for mediation;
• other legal points.
  
  

The 89 individual warranties are in sections relating to: