A neutral-form three-party shareholders' agreement for a joint venture company under the Companies Act 2006 in England & Wales, with minority protection provisions for a smaller shareholder.
How to use this template, read this first - Replace every
[SQUARE-BRACKET]field before use. - With three (often unequal) shareholders, the key issues are how decisions are taken and how a minority shareholder is protected from being out-voted on important matters. Reserved matters and weighted/unanimous consents are the main tools. - This sits alongside the articles of association; align the two. Have a solicitor review before use.
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THIS SHAREHOLDERS' AGREEMENT is made on [DATE]
BETWEEN (1) [SHAREHOLDER A]; (2) [SHAREHOLDER B]; (3) [SHAREHOLDER C]; and (4) [COMPANY NAME] (no. [NUMBER]) (the "Company").
Agreed terms
1. Shareholdings. The parties hold shares as follows: [A: __% ; B: __% ; C: __%]. The Company's business is [DESCRIBE].
2. The board. Board representation: [e.g. A and B may each appoint [NUMBER] directors; C (minority) may appoint [one director / a board observer]]. Quorum and chairing are set out in Schedule 1.
3. Decision-making.
- Ordinary operational decisions: by the board / simple majority.
- Reserved matters (Schedule 2): require the consent of shareholders holding at least [__]% [or the consent of each shareholder for the most fundamental matters], so the minority cannot be overridden on key issues such as changing the business, issuing shares (and diluting the minority), related-party deals, borrowing above £[AMOUNT], or winding up.
4. Minority protection (in particular). In addition to the reserved matters, the minority shareholder has: (a) pre-emption rights on new share issues to protect against dilution; (b) information rights (regular management accounts); and (c) tag-along rights so it can exit on the same terms if the majority sells.
5. Share transfers. Transfers are subject to pre-emption, tag-along and drag-along rights (Schedule 3). [Specify whether drag can be exercised against the minority and on what safeguards.]
6. Dividends. [Set out the distribution policy.]
7. Confidentiality and non-compete. As set out in clause 7 of Schedule 4, reasonable to protect the Company.
8. Deadlock / disputes. Disputes are referred to [escalation, then mediation] before court. [Specify any expert determination for valuation disputes.]
9. Governing law and jurisdiction. This Agreement is governed by the law of England and Wales, whose courts have jurisdiction.
Execution
Signed by [A] / [B] / [C] / for [COMPANY]: __________________ Date: [DATE]
Schedules: 1, Board · 2, Reserved matters · 3, Transfer provisions · 4, Confidentiality & non-compete
--- This template is a starting point and not legal advice. Minority-protection mechanics and the interaction with the articles are critical, have a qualified solicitor review and adapt both before use. Governing law: England & Wales.