START-UP ADVICE

“DON’T END UP IN A COMPLICATED,
DISTRESSING AND COSTLY LEGAL BATTLE
DOWN THE LINE BECAUSE YOU FAILED TO
GET THE BASICS RIGHT AT THE START.”
The key provisions to include in a shareholders’
agreement relate to:
1) Issuing and transferring shares – including
provisions to prevent unwanted third parties
acquiring shares and how a shareholder can sell
shares.
2) Providing some protection to holders of less
than 50% of the shares – including requiring certain
decisions to be agreed by all shareholders.
3) Running the company – including appointing,
removing and paying directors, deciding on
the company’s business, making large capital
outlays, providing management information to
shareholders, banking arrangements and financing
the company.
4) Paying dividends.
5) Competition restrictions.
6) Dispute resolution procedures.
It is best to put a shareholders’ agreement in place
when you form the company and issue the first
shares.
This creates a common understanding of
shareholders’ expectations of the business.
Don’t end up in a complicated, distressing and
costly legal battle down the line because you failed
to get the basics right at the start.
A stakeholders’ agreement is the most sensible way
to make sure that, if the worst should happen, you
are not left with nothing.
Inform Direct is an online service that makes it easy
for individuals to form and manage their company.
The aim is to take care of the administrative side
of running a company giving you more time to
concentrate on making your business prosper. Find
out more at www.informdirect.co.uk
A final word of warning
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