Shareholder agreements govern the relations among shareholders in privately held firms, such as joint ventures or venture capital-backed firms. An explanation for the use of put and call options, tag-along rights, drag-along rights, demand rights, piggy-back rights, and catch-up clauses in shareholder agreements. We view these clauses as serving (1) to induce the parties to make ex ante investments, (2) to preclude a party from engaging in ex post transfers, and (3) to achieve the efficient ex post allocation of stakes in the firm. Shareholder agreements specify the rights and duties of shareholders when those prescribed by law and regulation are thought not to be appropriate. Shareholder agreements are used mostly by companies with at least some shareholders actively involved in the management of the company.
What is the structure of the company and how is equity divided among shareholders? Should the agreement be unanimous and involve all (or just some) of the shareholders? Who owns or will own shares the parties to the agreement. Are there vesting provisions shares may be subject to cancellation is a shareholder/manager quits. Are shareholders allowed to pledge or hypothecate their shares? Who is on the Board? What about outside board members? Who are the officers and managers? What constitutes a quorum for meetings? What are the restrictions on new equity issues, e.g. anti-dilution aspects, pre-emptive rights and tag-along provisions? How are ownership buyouts to be handled? (e.g. shotgun clause approach versus voluntary sale approach). How are disputes to be resolved among shareholders arbitration clause? How are share sales handled? e.g.
first right of refusal. What are shareholders' obligations and commitment? What are shareholders' rights? What information, financial statements, reports, etc. can shareholders access? What happens in the event of death/incapacity? How is a share valuation determined to buy out an estate in the event of death is life insurance required? Funding for purchase of shares from estate or for key person insurance. What are the operating guidelines or restrictions (budget approvals, spending limits banking, etc. What types of decisions require unanimous board and/or unanimous shareholder approval? Compensation issues - remuneration of officers & directors, dividend policies are other agreements required as well, e.g. management contracts, confidentialit
y agreements, patent rights, etc? Should there be any restrictions on shareholders with respect to competing interests? What could trigger the dissolution of the business? What is the liability exposure and is there any corporate indemnification (and insurance)? Who are the company's professional advisors (legal, audit, etc.)? Are there any financial obligations by shareholders (bank guarantees, shareholder loans, etc)?
Shareholders' agreements, properly structured and funded, are a critical part of any business with more than one shareholder. A well-thought-out agreement provides an orderly way to transfer shares in the business and helps keep the business running smoothly in the face of future events such as death, disability or retirement of a shareholder.
These agreements generally establish a purchaser for the shares of the deceased or existing shareholder, a formula for determining the purchase price of the shares, and a method for funding the purchase. A venture capitalist who does not acquire control with his purchase of company stock will usually require a shareholders' agreement as a condition of funding. Management that sells a controlling interest in its company's common stock normally insists upon a shareholders' agreement to ensure its continued ability to run the company.
Shareholders' agreements often contain other provisions affecting management and its relationship with its investors. These provisions commonly contain limitations on the manager's ability to sell his shares to outsiders and provide for the disposition of his shares in the event of his death or termination of employment.
Shareholders' agreements are also commonly used for estate planning purposes. Management should consider shareholders' agreements carefully. They should have a limited term and, in most cases, should terminate in the event of a public offering of the company's stock or sale of the company.
Our Shareholders Agreement can be used where two or more parties wish to carry on business together as a limited company and wish to regulate the relationship between shareholders and determine actions in the event of deadlock. It is suitable for a group of shareholders working together who wish to arrange for particular management decisions (relating to the structure of the company) to be taken unanimously and allows each shareholder to appoint one director.
You can insert the names and details of the parties involved, and the wizard will format the document accordingly.
A bankrupt person may not be appointed as a director. If a director becomes bankrupt after appointment, he must immediately resign as a director unless leave to continue is given by the courts. A person who has had a disqualification order made against him may not act as a company director. The auditor of a company cannot also be a director or company secretary of that company. A director of an insolvent company cannot, without the leave of the court, be appointed as a director of a company with a prohibited name. The company secretary cannot also be the sole director of the company. A director aged over 70 may not be appointed to a public company or a subsidiary of a public company.
This exclusion can be overcome if the company's Articles exclude Table A, Regulation 81 and the appointment is approved by the shareholders of the company. In addition the Act and Articles of Association may provide further instances where appointment may not be made or may cease.
This is our most popular package with UK residents, and includes: The submission of forms detailing your company's executive officers The registration of your £1,000 authorised share capital (a minimum of one share must be issued) Company formation is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees The appointment of your own candidates as directors and secretary (a minimum of two people are required) The following documents will be e-mailed to you (Note: these documents are to be printed and signed): Electronic Certificate of Incorporation (PDF) Electronic Memorandum & Articles of Association (MS Word) Minutes of the First Meeting of Directors (MS Word) Share Certificates and company Register
Economy Package
£ 82.00
Annual Maintenance Fee £50.00
This is our most popular package with EU residents, and includes: The submission of forms detailing your company's executive officers The registration of your £1,000 authorised share capital (a minimum of one share must be issued) Company registration is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees The appointment of your own candidates as directors and secretary (a minimum of two people are required) A registered office address for 12 months, provided by Coddan An application form for the following year's renewal of the Registered Office Address service (£50.00) Annual Return and Annual Account reminder The following documents will be e-mailed to you (Note: these documents are to be printed and signed): Electronic Certificate of Incorporation (PDF) Electronic Memorandum & Articles of Association (MS Word) Minutes of the First Meeting of Directors (MS Word) Share Certificates and company Register
Premier Package
£ 131.95
Annual Maintenance Fee £99.95
This is our most popular package with small business, and includes: The submission of forms detailing your company's executive director The registration of your £1,000 authorised share capital (a minimum of one share must be issued) Company incorporation is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees Applicant appointment of director for company (appointed electronically) A registered office address for 12 months, provided by Coddan An application form for the following year's renewal of the Registered Office Address service (£50.00) Nominee company secretary service for 12 months (next year - £49.95) Annual Return and Annual Account reminder The following documents will be posted to you (these documents will be sent via Royal Mail): The original laminated Certificate of Incorporation A bound copy of the Memorandum and Articles of Association The Minutes of the First Directors' Meeting Two printed share certificates and Company Register
Deluxe Package
£ 256.95
Annual Maintenance Fee £224.95
This is our most popular package with overseas residents, and includes: The filing and registration of your company in England The registration of your £1,000 authorized share capital (a minimum of one share must be issued) Company formation is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees A registered office address for 12 months, provided by Coddan An application form for the following year's renewal of the Registered Office Address service (£50.00) Nominee Company secretarial service for 12 months (next year - £49.95) Coddan provides a company nominee director service for 1 year (next year - £125.00) The name of the nominee director & secretary will appear as a public record Annual Return and Annual Account reminder The following documents will be posted to you (these documents will be sent via Royal Mail): The original laminated Certificate of Incorporation A bound copy of the Memorandum and Articles of Association The Minutes of the First Directors' Meeting Two printed share certificates and Company' Register A pre-signed, undated letter of resignation from the nominee director A General Power of Attorney signed by nominee director An indemnity Letter for General Power of Attorney A nominee service agreement which provides for the indemnification of the nominees
Name Protection
£ 22.00
Annual Maintenance Fee £60.00
The purpose of this package: This package allows you to register a company name with Companies House and thus prevent this name being used to form a company by anyone else This package includes: The registration of a non-trading limited company with your choice of name Payment of UK legal and initiation fees A nominee director A nominee secretary A nominee shareholder A registered office address Management of the company: Coddan will file the annual return and dormant company accounts on your behalf for an annual fee of £60.00 If you do not wish to renew the management option at the end of term, the company will be dissolved
Business Start-Up: Legal Requirements
Company subscribers may be residents outside the UK You must appoint a minimum of ONE Director There is no maximum number of Directors Directors can be corporate bodies or private individuals A Director can be of any nationality Directors need not be formally trained All companies must appoint a company Secretary Secretaries can be corporate bodies or private individuals A Secretary can be of any nationality. If there is only ONE Director he or she CANNOT also be the Secretary A company must have a minimum of one shareholder who may be a corporate body or an individual No minimum paid up share capital A minimum of one share may be issued Capital may be denominated in any currency Shareholders and directors meetings may take place outside Great Britain The company is required to have a registered office in the UK
The term "dormant" applies to a company that, in legal terms, has "no significant accounting transactions" during a financial year. It is not the same as a "non-trading company", a term that has no legal meaning. No significant accounting transactions means no entries in the company's accounting records. The amount paid for shares when the company is first formed and a few costs that the company may incur in order to keep the company registered at Companies House do not count as significant accounting transactions.
WHAT IS THE DIFFERENCE BETWEEN A NON-TRADING COMPANY AND A DORMANT COMPANY?
A company can be non-trading in the sense that it isn't doing business. But it may still have other accounting transactions going through its books, which means that it is not dormant in a legal sense. A dormant company must not have any accounting transactions except specific allowable transactions that can be disregarded.
WHY HAVE A DORMANT COMPANY?
Companies can be dormant for various reasons, often to protect a company name, in readiness for a future project, or to hold an asset or intellectual property. Some flat management companies whose main purpose is to own the head lease or the freehold of a property choose to become dormant by setting up a residents' association to deal with any expenses.
A company can remain dormant for as long as necessary - indefinitely if, for example, its purpose it just to prevent the name being used by another company. However, there are expenses associated with keeping a company on the register. And, while the company is dormant, various other documents and annual company balance sheets must still be prepared and filed at Companies House. The company will have to decide how expenses will be met and who will run the company and be responsible for ensuring that all the legal requirements are met.
WHO RUNS A DORMANT COMPANY?
If it is to remain dormant, a company cannot have paid employees because their wages would have to be recorded in the accounting records. However, all companies, including those that are dormant, must have: at least one director for a private company (two directors for a public company); and a company secretary.
NB: A sole director cannot also be the company secretary. There MUST be at least two officers of the company.
WHAT RESPONSIBILITIES DO THE OFFICERS OF A DORMANT COMPANY HAVE?
The responsibilities of a dormant company's officers are the same as for those of a trading company. The directors and secretary manage the company on behalf of the shareholders or members. Among other things, they are responsible for holding meetings and ensuring that all the necessary returns, accounts and other documents reach Companies House by the due date.
WHAT HAPPENS IF DOCUMENTS ARE NOT DELIVERED TO COMPANIES HOUSE?
The company's officers could be prosecuted because they are personally responsible for ensuring that documents are delivered on time. Failing to do so is a criminal offence. In addition, there will always be an automatic civil penalty for filing accounts late. Companies House could also reasonably assume that the company is no longer required and strike it from the register. If a company is struck off the register, it ceases to exist and its assets become Crown property.
Guidance & FAQs
FAQs: Dormant Companies
£ 32.00
This is our most popular package with UK residents, and includes:
The submission of forms detailing your company's executive officers
