Shareholders Agreement (UK)
Updated 24 April 2026
SHAREHOLDERS AGREEMENT
This Shareholders Agreement (this “Agreement”) is made on [effective date] between:
The Company: [company name] Limited, a private company limited by shares incorporated in England and Wales (company number [company number]), whose registered office is at [registered office address] (“the Company”);
Shareholder A: [shareholder a full name], of [shareholder a address];
Shareholder B: [shareholder b full name], of [shareholder b address].
Note: Add further parties above for each additional shareholder, following the same format. Each new party must also appear in Schedule 2 and in the Signatures section.
The Shareholders are together the “Shareholders” and each individually a “Shareholder.” The Company and the Shareholders are together the “Parties.”
1. Definitions and Interpretation
Note: This clause explains what the key defined terms in this Agreement mean wherever they appear with a capital letter.
1.1 Articles. The articles of association of the Company as amended from time to time.
1.2 Board. The board of directors of the Company from time to time.
1.3 Business. The principal business activity of the Company as described in the business plan approved by the Board from time to time, or as otherwise determined by the Board.
1.4 Business Day. Any day other than a Saturday, Sunday or public holiday in England and Wales when banks in London are open for business.
1.5 Confidential Information. All non-public information relating to the Company’s business, affairs, customers, technology, finances or plans, but excludes information that is or becomes publicly available other than through a breach of this Agreement.
1.6 Deed of Adherence. A deed substantially in the form set out in Schedule 4.
1.7 Fair Value. The value per Share agreed in writing between the relevant parties or, failing agreement within [pre-emption acceptance period] Business Days of a dispute arising, as determined by an Independent Valuer under Clause 6.
1.8 Good Leaver. A Shareholder who ceases to be employed or engaged by the Company by reason of death, permanent incapacitating illness, or any other reason the Board resolves in its reasonable discretion to be a good leaver event.
1.9 Independent Valuer. An independent chartered accountant agreed by the relevant parties or, failing agreement within 10 Business Days, appointed by the President of the Institute of Chartered Accountants in England and Wales.
1.10 Reserved Matters. The matters listed in Schedule 3.
1.11 Shares. Ordinary shares in the capital of the Company.
1.12 Shareholder Consent. Prior written consent of Shareholders holding not less than [reserved matters threshold] of the Shares for the time being in issue.
1.13 Transfer. Any sale, transfer, assignment, charge, pledge, or other disposal of Shares or any interest in Shares.
1.14 Where this Agreement conflicts with the Articles, this Agreement prevails as between the Shareholders, and the Shareholders shall procure that the Articles are amended to reflect this Agreement as soon as reasonably practicable. References to statutes include all amendments and re-enactments. Words in the singular include the plural and vice versa.
2. Shareholdings and Capital
2.1 The Shareholders hold Shares in the proportions set out in Schedule 2.
2.2 The Company shall not allot or issue any new Shares, or grant any option, warrant or other right to acquire Shares, without Shareholder Consent, except pursuant to a share option scheme approved in accordance with Schedule 3.
Note: Under section 561 of the Companies Act 2006, existing shareholders have statutory pre-emption rights on any cash allotment of new ordinary shares. Clause 2.2 supplements those rights and extends them to all allotments regardless of consideration. If the Company’s articles already disapply statutory pre-emption rights, Clause 2.2 still applies as a contractual restriction.
3. Board of Directors
3.1 Appointment Rights. Each Shareholder holding at least [director appointment threshold] of the Shares is entitled to appoint one director to the Board by written notice to the Company, and to remove any director so appointed at any time by written notice.
Note: Under section 168 of the Companies Act 2006, any shareholder has the statutory right to remove a director by ordinary resolution with 28 clear days’ special notice to the company, regardless of any contractual appointment rights in this Clause. Ensure the Articles do not inadvertently override this statutory position.
3.2 Board Meetings. The Board shall meet at least quarterly. Meetings may be held in person, by telephone, or by video conference provided all participants can speak and hear each other simultaneously.
3.3 Quorum. A quorum for a Board meeting requires at least [board quorum] directors, including at least one director appointed by each Shareholder holding [director appointment threshold] or more of the Shares. If a quorum cannot be formed at a duly convened meeting, the meeting shall be adjourned for five Business Days, at which adjourned meeting any [board quorum] directors present shall constitute a quorum.
3.4 Board Decisions. Board decisions shall be taken by simple majority. Reserved Matters require Shareholder Consent under Clause 4.
4. Reserved Matters
4.1 Each Shareholder shall exercise its voting rights and other powers as a shareholder of the Company to ensure that the Company does not take any action listed in Schedule 3 without Shareholder Consent.
4.2 Schedule 3 may only be amended with the prior written consent of Shareholders holding not less than 90% of the Shares.
5. Transfer of Shares
5.1 General Restriction. No Shareholder may Transfer any Shares except in accordance with this Clause 5 or with the prior written consent of all other Shareholders.
5.2 Pre-emption on Transfer. A Shareholder wishing to Transfer Shares (the “Selling Shareholder”) must first offer them to the remaining Shareholders pro rata to their existing holdings at the proposed transfer price (or, if the transaction is not an arm’s length cash sale, at Fair Value), by written notice specifying the number of Shares, the price per Share, and the proposed transferee. The remaining Shareholders shall have [pre-emption acceptance period] Business Days to accept. Any Shares not accepted may be transferred to the proposed transferee at no less than the offered price within 60 Business Days of the expiry of the acceptance period. If that transfer does not complete within 60 Business Days, the pre-emption procedure must be repeated.
Note: Stamp duty at 0.5% of the consideration is payable by the buyer on any share transfer under HMRC’s self-assessment regime. Include a provision in each transaction document allocating this liability.
5.3 Permitted Transfers. A Shareholder may Transfer Shares without triggering Clause 5.2 to: (a) a wholly owned subsidiary of that Shareholder; or (b) a family trust of which that Shareholder is the sole or principal beneficiary; provided that (i) the transferee first executes a Deed of Adherence and (ii) the transferring Shareholder remains jointly and severally liable for the transferee’s obligations under this Agreement.
5.4 Deed of Adherence. No Shareholder may Transfer any Shares to a person who is not already a party to this Agreement unless that person first executes a Deed of Adherence in favour of all other parties. Each Shareholder irrevocably appoints the Company as its attorney to execute any Deed of Adherence on its behalf.
5.5 Drag-Along. If Shareholders holding at least [drag-along threshold] of the Shares (the “Dragging Shareholders”) receive a bona fide arm’s length offer to acquire all of the Shares, they may require all other Shareholders to sell their Shares to that buyer on the same terms and at the same price per Share, by written notice specifying the buyer, price, and proposed completion date. Each recipient shall be bound to transfer their Shares within 20 Business Days of receiving that notice.
Note: Drag-along enables a qualifying majority to force a clean exit. Consider adding a minimum price floor (e.g. not less than the price originally paid by the minority Shareholder) to protect minority Shareholders from being forced out at undervalue.
5.6 Tag-Along. If any Shareholder proposes to Transfer Shares representing [tag-along threshold] or more of the total Shares in issue to a third party, each other Shareholder may by written notice given within 15 Business Days require the proposed buyer to purchase their Shares on the same terms and at the same price per Share. If the buyer is unwilling to acquire those additional Shares, the proposed Transfer shall not proceed.
Note: Tag-along protects minority Shareholders from being left behind in a partial exit. Adjust the threshold downward for stronger minority protection.
6. Valuation
6.1 Expert Determination. Where Fair Value must be determined, the Independent Valuer shall act as an expert (not as an arbitrator). The Independent Valuer’s determination shall be final and binding in the absence of manifest error.
6.2 Basis of Valuation. The Independent Valuer shall value the relevant Shares on the basis of a hypothetical arm’s length sale between a willing buyer and a willing seller, with no discount for any minority holding.
6.3 Costs. The Independent Valuer’s fees shall be borne equally by the parties to the dispute unless the Independent Valuer directs otherwise.
7. Leaver Provisions
Note: Delete this entire Clause 7 if all Shareholders are passive investors with no employment or consultancy role in the Company. Leaver provisions are only appropriate where share ownership is linked to active participation. Retain only the option that reflects your arrangement and delete the other.
Note: Option A treats all leavers the same — compulsory transfer at Fair Value regardless of the reason for leaving. Option B distinguishes between Good Leavers (who receive Fair Value) and Bad Leavers (who receive the lower of Fair Value and their original subscription price). Choose Option A for simplicity; choose Option B if you want to distinguish between voluntary and involuntary departures. Delete whichever option you do not use.
Option A: All Leavers at Fair Value. If a Shareholder who is employed or engaged by the Company ceases to be so for any reason, that Shareholder shall, if the Board so requests by written notice within three months of cessation, transfer their Shares to the remaining Shareholders (pro rata to their then-holdings) at Fair Value.
Option B: Good Leaver / Bad Leaver. If a Shareholder who is employed or engaged by the Company ceases to be so: (a) a Good Leaver shall transfer their Shares at Fair Value; (b) a Shareholder who is not a Good Leaver (a “Bad Leaver”) shall transfer their Shares at the lower of (i) Fair Value and (ii) the price originally paid by that Shareholder for those Shares. The Board shall give written notice of any compulsory transfer within three months of the leaver event, failing which the right to require a transfer lapses.
Note: Ensure that any Bad Leaver transfer price is not so low as to constitute an unlawful penalty under English contract law. A price below original subscription cost may be challenged where it bears no relationship to the loss suffered by the Company or the remaining Shareholders.
8. Dividend Policy
Note: Dividends may only be paid out of distributable profits in accordance with Part 23 of the Companies Act 2006. Choose one option and delete the other. Option A creates a contractual commitment to declare minimum dividends where financially prudent. Option B leaves dividend decisions entirely to the Board.
Option A: Minimum Dividend. Subject to the Company’s financial position and applicable law, the Board shall declare a dividend of not less than [minimum dividend percentage]% of distributable profits in each financial year, provided it is financially prudent to do so.
Option B: Board Discretion. The declaration and payment of dividends shall be at the Board’s absolute discretion. No Shareholder has any entitlement to a dividend.
9. Deadlock
9.1 Definition. A “Deadlock” arises where the Board or the Shareholders are unable to pass a resolution on a Reserved Matter after two duly convened meetings held not less than 10 Business Days apart.
9.2 Notice. On a Deadlock, any Shareholder may serve written notice on the others. The Shareholders shall negotiate in good faith to resolve the matter for [deadlock notice period] Business Days following that notice.
9.3 Resolution Mechanism. If the Deadlock is not resolved within [deadlock notice period] Business Days, the mechanism below applies. Choose Option A or Option B and delete the other.
Note: Option A (Russian Roulette) works best where Shareholders have broadly comparable financial resources. It works less fairly where one party is significantly wealthier and can force a buyout at a price the other cannot match. Option B (winding up) is a last resort that reflects the Shareholders’ preference for dissolution over a forced buyout. Delete whichever option you do not use.
Option A: Russian Roulette. Any Shareholder may serve a written offer on the other(s) to purchase all (but not some) of the other’s Shares at a specified price per Share. The recipient must, within [deadlock notice period] Business Days, elect either: (i) to sell their Shares to the offeror at that price; or (ii) to purchase the offeror’s Shares at the same price per Share. Failure to elect shall be treated as acceptance of the offer.
Option B: Members’ Voluntary Winding Up. The Shareholders shall co-operate in good faith to place the Company into members’ voluntary liquidation as soon as reasonably practicable.
10. Confidentiality
10.1 Each Shareholder shall keep all Confidential Information secret and shall not disclose it to any third party without the prior written consent of the Board, except: (a) to professional advisers bound by equivalent obligations of confidentiality; (b) to members of a corporate Shareholder’s group on a need-to-know basis, provided they are bound by equivalent confidentiality obligations; or (c) as required by law, regulation, or order of a competent authority.
10.2 This obligation shall survive termination or expiry of this Agreement for [confidentiality survival period] years.
11. Restrictive Covenants
Note: Delete this entire Clause 11 if the Shareholders are passive investors with no operational role in the Company. Each restriction must be reasonable in scope, duration, and geography to be enforceable under English law. The courts will not enforce restrictions that go beyond what is reasonably necessary to protect the Company’s legitimate business interests. Take independent legal advice before relying on these provisions.
11.1 Each Shareholder who is employed or engaged by the Company agrees that, during the period they hold Shares and for [non-compete duration] months after ceasing to hold any Shares (whichever is the later), they shall not without Shareholder Consent: (a) carry on or be involved in any business that competes directly with the Business within [non-compete territory], provided that this restriction shall not prevent any Shareholder from holding shares or other securities in any company listed on a recognised investment exchange (as defined in section 285 of the Financial Services and Markets Act 2000) where that holding does not exceed 5% of the issued share capital of that company; (b) solicit or induce any customer of the Company, with whom they had material dealings in the 12 months prior to cessation, to reduce or cease their business with the Company; or (c) solicit or induce any employee or consultant of the Company to leave their engagement.
11.2 Each restriction in Clause 11.1 is a separate and independent undertaking. If any restriction is held void or unenforceable, it shall be read down to the minimum extent necessary to make it enforceable, without affecting the validity of the remaining restrictions.
12. Termination
12.1 Automatic Termination. This Agreement shall terminate automatically: (a) when a single Shareholder holds all of the Shares; (b) on written agreement of all Shareholders; or (c) on the commencement of winding-up proceedings in respect of the Company.
12.2 Surviving Clauses. On termination, Clauses 1, 10, 11, 12, and 13 shall continue in force.
12.3 Accrued Rights. Termination shall not affect any rights, remedies, obligations, or liabilities of any party that have accrued up to the date of termination.
13. General Provisions
13.1 Governing Law and Jurisdiction. This Agreement and any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with it shall be governed by the law of England and Wales. Each party irrevocably submits to the exclusive jurisdiction of the courts of England and Wales.
13.2 Entire Agreement. This Agreement (together with the Schedules) constitutes the entire agreement between the parties in relation to its subject matter and supersedes all prior agreements, representations, and understandings, whether written or oral. Each party acknowledges it has not relied on any statement or representation not set out in this Agreement.
13.3 Variation. No variation of this Agreement shall be effective unless it is in writing and signed by or on behalf of all Shareholders for the time being.
13.4 Waiver. No failure or delay by any party in exercising any right or remedy shall operate as a waiver. No single or partial exercise shall preclude any other or further exercise.
13.5 Severability. If any provision is found invalid or unenforceable, it shall be severed without affecting the remaining provisions. The parties shall negotiate in good faith to replace any severed provision with a lawful provision achieving the same commercial effect.
13.6 Third Party Rights. No person who is not a party to this Agreement has any right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement. The parties’ rights to rescind or vary this Agreement are not subject to the consent of any third party.
13.7 Notices. Any notice under this Agreement shall be in writing and delivered by hand, first-class post, or email to the address set out in Schedule 2 (or such other address notified in writing). A notice is effective: on delivery by hand; at 9.00 am on the second Business Day after first-class posting; or at the time of transmission by email, provided no delivery failure notification is received.
13.8 Counterparts and Electronic Signatures. This Agreement may be executed in any number of counterparts, each constituting an original, and together constituting one agreement. An electronic signature applied to this Agreement is admissible in evidence and equivalent to a handwritten signature for the purposes of section 7 of the Electronic Communications Act 2000.
Note: The Deed of Adherence in Schedule 4 is executed as a deed and is governed by the Law of Property (Miscellaneous Provisions) Act 1989. Under section 7 of the Electronic Communications Act 2000, electronic signatures are valid for simple contracts; however that provision does not apply to deeds. A deed requires a handwritten signature in the presence of a witness, or a certified electronic signature that satisfies the deed execution requirements under that Act.
13.9 Status of Agreement. Each Shareholder shall exercise its voting rights and other powers as a shareholder of the Company to give full force and effect to the provisions of this Agreement according to its spirit and intention.
SIGNATURES
Agreed and accepted by the Parties on the date first written above.
Note: Each individual Shareholder should sign in the presence of an independent witness. A corporate Shareholder should execute by two directors, or one director and the company secretary, in accordance with section 44 of the Companies Act 2006.
Signed for and on behalf of the Company
Signature:
Name:
Title / Capacity:
Date:
Signed by Shareholder A
Signature:
Name:
Title / Capacity:
Date:
Signed by Shareholder B
Signature:
Name:
Title / Capacity:
Date:
Note: Add a further signature block above for each additional Shareholder listed in Schedule 2.
Schedule 1 — Key Commercial Terms
Note: Complete every field below before executing this Agreement. All yellow-highlighted fields in the body of this Agreement are listed here for quick reference. Ensure the values entered here match those in the body and in Schedule 2.
Effective Date: [effective date]
Company Name: [company name]
Company Number: [company number]
Registered Office Address: [registered office address]
Shareholder A Full Name: [shareholder a full name]
Shareholder A Address: [shareholder a address]
Shareholder A Shares: [shareholder a shares]
Shareholder A Percentage Holding: [shareholder a percentage]
Shareholder B Full Name: [shareholder b full name]
Shareholder B Address: [shareholder b address]
Shareholder B Shares: [shareholder b shares]
Shareholder B Percentage Holding: [shareholder b percentage]
Reserved Matters Threshold (Shareholder Consent): [reserved matters threshold]
Director Appointment Threshold: [director appointment threshold]
Board Quorum: [board quorum]
Pre-emption Acceptance Period (Business Days): [pre-emption acceptance period]
Drag-Along Threshold: [drag-along threshold]
Tag-Along Threshold: [tag-along threshold]
Minimum Dividend Percentage (Option A only): [minimum dividend percentage]
Deadlock Notice Period (Business Days): [deadlock notice period]
Confidentiality Survival Period (years): [confidentiality survival period]
Non-Compete Duration (months): [non-compete duration]
Non-Compete Territory: [non-compete territory]
Schedule 2 — Shareholders
Note: List all Shareholders, their addresses (for notices), the number of Shares they hold, and their percentage holding at the date of this Agreement. Ensure the total Shares and percentages are consistent with the Company’s share register and any shareholders’ register maintained at Companies House.
Name: [shareholder a full name] | Address: [shareholder a address] | Shares: [shareholder a shares] | % Holding: [shareholder a percentage]
Name: [shareholder b full name] | Address: [shareholder b address] | Shares: [shareholder b shares] | % Holding: [shareholder b percentage]
Note: Add further rows above for each additional Shareholder. Each new Shareholder must also appear as a named party in the Parties section, in the Signatures section, and in Schedule 1.
Schedule 3 — Reserved Matters
Note: Reserved Matters require Shareholder Consent (see the definition in Clause 1.12). Review and adjust this list to reflect the specific governance needs of your business. Strike out or add items as agreed between the Shareholders before signing.
The following matters require Shareholder Consent:
(1) Any amendment to the Articles or this Agreement (90% threshold required under Clause 4.2).
(2) Any change to the nature or principal scope of the Business.
(3) Any allotment or issue of new Shares or securities convertible into Shares, other than pursuant to a share option scheme previously approved by Shareholder Consent.
(4) Any acquisition or disposal of assets or undertakings exceeding [£[amount] in aggregate in any financial year.
(5) Entering into any borrowing, financial commitment, or guarantee exceeding [£[amount] in aggregate in any financial year.
(6) Approval of the annual business plan and budget, and any material deviation from an approved budget.
(7) Any merger, amalgamation, reconstruction, or reorganisation of the Company.
(8) The appointment or removal of the Company’s auditors or accountants.
(9) Any transaction between the Company and a Shareholder or a person connected with a Shareholder, otherwise than on arm’s length commercial terms.
(10) Any decision to wind up, dissolve, or place the Company into administration or liquidation, save as required by law.
(11) [insert further reserved matters as agreed between the shareholders.]
Schedule 4 — Deed of Adherence
Note: This deed must be executed as a deed — not as a simple contract. It requires a handwritten signature in the presence of a witness. Electronic signatures under section 7 of the Electronic Communications Act 2000 do not satisfy the requirements for a deed; the Law of Property (Miscellaneous Provisions) Act 1989 governs the execution formalities. Obtain the incoming Shareholder’s signature before any Share transfer or allotment completes.
THIS DEED OF ADHERENCE is made on [deed date] by:
[covenantor full name / company name], of / whose registered office is at [covenantor address] (the “Covenantor”).
WHEREAS the Covenantor has agreed to acquire [number of shares being transferred] ordinary shares in [company name] Limited pursuant to a transfer or allotment made in accordance with the Shareholders Agreement dated [effective date] (the “Agreement”).
NOW THIS DEED WITNESSES that the Covenantor covenants with each party to the Agreement to observe, perform, and be bound by all the terms of the Agreement as if the Covenantor had been an original party as a Shareholder.
EXECUTED AS A DEED by the Covenantor:
Signature of Covenantor (in the presence of a witness)
Signature:
Name:
Title / Capacity:
Date:
Witness signature:
Witness name (print):
Witness address:
About this template
What is this template?
Shareholders Agreement (UK) is a free, ready-to-use Commercial law template you can open, customize, and download on GitLaw. It gives you a professionally structured starting point, so you never have to draft from a blank page. The wording is plain and modern, organized into clear sections that are easy to read, edit, and adapt to your own situation before you share or sign it.
When should you use it?
Reach for this Commercial law template whenever you need a reliable agreement quickly and want to be sure the essentials are covered. It suits individuals, freelancers, startups, and established businesses alike. Instead of paying for a document drafted from scratch, you can start here, tailor the details to your arrangement, and have a polished draft ready in minutes. This version is drafted with England & Wales in mind, though you should always review the final wording against the laws that apply to you.
What's typically included?
A well-drafted Commercial law usually sets out the parties involved, the scope of the agreement, and each side's rights and responsibilities. Expect sections covering key terms and definitions, how long the agreement lasts, how it can be ended, and what happens if something goes wrong. This template brings those building blocks together in a sensible order, so you can focus on the specifics rather than worrying about what to include. Open it to read the full document, then sign up to edit, negotiate, and e-sign it directly in GitLaw.