Oliver & Co advised on the preparation and negotiation of a shareholders’ agreement for a company operating within the recruitment industry. The company had four shareholders (two majority and two minority shareholders) holding shares on an overall 50:50 basis. While the shareholdings were split evenly between two distinct shareholder groups, the absence of a formal contractual framework had begun to present risks around decision-making and strategic alignment of the company.
Key Objectives
The purpose of the shareholders’ agreement was to formalise the working relationship between the parties, introduce clear governance mechanisms, and provide an agreed route for resolving disagreements particularly given the equal shareholding structure.
The shareholders wanted to ensure that key decisions could not be taken unilaterally and that all parties had confidence in the long-term management and direction of the company.
Legal Work Undertaken
We prepared a bespoke shareholders’ agreement that addressed the following key elements:
- Reserved matters: A clearly defined list of strategic and operational decisions (such as issuing new shares, entering into significant contracts, changes to the business plan, or appointing directors) that required the consent of both shareholder groups.
- Board composition and voting rights: Provisions were included to ensure equal representation at board level and to avoid any group being disadvantaged in day-to-day management.
- Deadlock provisions: Recognising the 50:50 ownership split, the agreement contained a structured deadlock resolution mechanism. This included an initial negotiation period and, eventually, transfer of shares mechanism should agreement remain unattainable.
- Transfer of shares: The agreement included standard pre-emption rights and tailored provisions around permitted transfers, to ensure any future changes in ownership were controlled and consistent with the shareholders’ long-term goals.
We also reviewed the company’s existing articles of association to ensure consistency with the new agreement and advised on any necessary updates.
Outcome
The shareholders’ agreement was successfully finalised and executed, providing a clear and robust framework for the governance of the company. The process helped surface and resolve potential future issues, fostering a more transparent and collaborative working relationship between the two shareholder groups.
Do You Need Our Help?
We can help companies and shareholders establish clear, robust agreements that protect everyone’s interests. Whether you are preparing a new shareholders’ agreement, reviewing existing arrangements, or resolving disputes between majority and minority shareholders, we provide practical, commercially focused legal advice to ensure clarity around decision-making, governance, and strategic alignment. From drafting and negotiating agreements to addressing potential risks and protecting shareholder rights, our team will guide you through every stage of the process.
If your business is looking to put a formal shareholder framework in place or review existing arrangements, get in touch with us today. Call us on 01244 312306, email us at
