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Director Shareholder Agreement Template for England and Wales

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Key Requirements PROMPT example:

Director Shareholder Agreement

"I need a Director Shareholder Agreement for my tech startup with three founding directors who each own 33.3% of shares, including specific provisions for technology IP protection and a detailed exit strategy in case any founder wants to leave after January 2025."

Document background
The Director Shareholder Agreement is a crucial document for companies where directors hold shares in the business. It is particularly important in private companies operating under English and Welsh law where the separation between ownership and management is less distinct. This agreement addresses the dual role of director-shareholders, establishing clear protocols for decision-making, share transfers, and dispute resolution. It helps protect both the company's and individuals' interests while ensuring compliance with the Companies Act 2006 and other relevant legislation.
Suggested Sections

1. Parties: Identification of the company, directors, and shareholders

2. Background: Context and purpose of the agreement

3. Definitions: Key terms used throughout the agreement

4. Appointment and Duties: Terms of director appointment and responsibilities

5. Share Ownership: Details of shareholding structure and rights

6. Transfer of Shares: Procedures for share transfers and restrictions

7. Board Meetings: Procedures for conducting board meetings

8. Shareholder Meetings: Procedures for shareholder meetings and voting

9. Termination: Circumstances and procedures for termination

Optional Sections

1. Non-Compete Provisions: Restrictions on competitive activities - include when protecting company interests from competition

2. Tag-Along Rights: Minority shareholder protection provisions - include when minority shareholders need additional protection

3. Drag-Along Rights: Majority shareholder exit provisions - include when facilitating potential company sale

4. Dividend Policy: Specific dividend distribution arrangements - include when establishing formal dividend procedures

Suggested Schedules

1. Share Capital Table: Detailed breakdown of shareholding structure

2. Reserved Matters: List of decisions requiring special approval

3. Service Agreement Terms: Executive director employment terms

4. Company Information: Key company details and registration information

5. Deed of Adherence: Template for new shareholders joining the agreement

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈ˰æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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Relevant Industries
Relevant Teams
Relevant Roles
Industries

Companies Act 2006: Primary legislation governing company operations, including directors' duties (Sections 171-177), shareholders' rights and responsibilities, company constitution requirements, and share capital/transfer provisions

Small Business, Enterprise and Employment Act 2015: Legislation covering corporate transparency requirements and the Register of Persons with Significant Control (PSC)

Financial Services and Markets Act 2000: Regulatory framework for companies dealing with regulated activities

Employment Rights Act 1996: Legislation governing employment terms, particularly relevant for executive director employment provisions

Equality Act 2010: Legislative framework for preventing discrimination in corporate governance and employment

UK Corporate Governance Code: Best practice principles for corporate governance, primarily for listed companies but providing valuable guidance for all companies

Income Tax Act 2007: Tax legislation relevant to share schemes, director remuneration, and personal taxation matters

Corporation Tax Act 2010: Corporate tax legislation affecting company operations, dividend payments, and business taxation

UK GDPR and Data Protection Act 2018: Legislation governing the handling and protection of personal data within corporate operations

Competition Act 1998: Legal framework governing competition law and non-compete provisions in corporate agreements

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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