If you are in the health and social care sector and run your business through a limited company, a shareholders’ agreement can be extremely important in governing the way the Company is run.
A shareholders’ agreement is used in tandem with the Articles of Association of the Company to specifically manage the way that shareholders act and govern the processes that are to be followed following certain events occurring. A shareholders agreement is particularly important if something goes wrong with the business or disputes between shareholders arise.
Attwells health and social care providers are often local family run businesses and the thought of formalising the arrangements of the business over and above that of registering as a limited company may not have been considered or may seem too onerous. However, there are important aspects to consider including:
- How is the company going to be financed?
- How will the company be managed?
- What will the dividend or payment to Shareholders policies be?
- What will happen to the shares of a Shareholder upon death or incapacity?
- Are there different types of shares within the Company? How will these different types of shares be governed?
- What is the procedure for transfer of shares? If one shareholder leaves will their shares be offered to the other shareholders first?
- How will shares be valued upon a sale?
- What happens if the shareholders cannot agree on a decision?
For a small to medium sized health and social care providers, a shareholders’ agreement may also be used to incentivise employees. If a provider has a particularly excellent employee that the company wishes to be rewarded by way of granting them shares but does not want them to hold voting rights in the company then this can also be dealt with in the shareholders agreement.
It is important to consider these areas before it is too late and disagreements or potential costly disputes arise between the Shareholders of the company. Too often this upfront work is not dealt with and shareholder issues arise when there is no documentation in place to help.
Attwells have acted for a number of family run businesses in the health and social care sector. Attwells understands the sector and have the experience of explaining in plain English the legal language needed in drafting a shareholders agreement.
If you are a health or care provider and are looking for advice in the area of shareholders agreements then please do not hesitate to contact Nick Attwell on 0207 722 9898 or 01472 229200 or e-mail Nick at nick.attwell@attwells,com for an initial no-obligation chat.