Do you need a shareholders agreement?

Si vis pacem, para bellum is a Latin adage translated as, “If you want peace, prepare for war”.

Very often close friends, colleagues or family members think it is a good idea to go into business together. They may be fed up working for somebody else or they may have a fantastic idea which they want to develop.

There is nothing wrong with that in itself.  However, if that sounds like you, there are a number of sensible and cost-effective steps which you may take at the start of your journey to ensure future success and harmony.

You should ensure your trading medium is appropriate and take some preliminary professional advice.  Whether you trade as a partnership or through a limited company, there will be different issues to take into account.

From the outset you should sit down with your advisers and try to address every matter which could go wrong in the future.  As you know relationships can change over time and you need to be able to deal with situations as they arise. Think of every possible worst case scenario and put in place a shareholders’ or partnership agreement to provide a solution (i.e. if you want peace, prepare for war).

Some typical examples may be:

  • My co-shareholder has walked out on me and taken all customer details with him to set up in competition, what can I do?
  • My business partner wants to wind up the business and move abroad, what are my options?
  • My co-shareholder has died, what will happen to his shares in the company?

If you have any questions on how best to protect your business, or you would like a copy of our free checklist on shareholder protection, please contact Assured Life Advisers. Assured Life Advisers work with other industry professionals including accountants and legal advisers to provide you with joined-up, pragmatic advice.

Authors:  Joel Wood, Assured Life Advisers
Andy Herricks, Corporate Partner, Fletcher Day

Fletcher Day (, established in 2009, is a full-service commercial law firm headquartered in Mayfair, London.

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