02 Feb

Contents Introduction; Equity investment particulars;  Loan particulars; Particulars of share class rights; Transfer of shares; Future share issues; Management;  Items requiring unanimity or a specified majority; Financial matters; Capital requirements; Guarantees; Employment; Voting deadlock; Company protection; Miscellaneous; Checklist Notes 

See also Introduction to Shareholders' Agreements.

Company name and registration number
Company’s business
Issued share capital
Description of shares and number in each class
Any restrictions on the number and value of shares which the company may issue2
Current shareholders’ particulars
Current directors’ and secretary’s particulars
Equity investment particulars
Particulars of new shareholders
Number and class of shares to be allotted to each
Amount to be paid for shares being sold
Amount of non-cash consideration
Form of non-cash consideration
Loan particulars
Particulars of lender
Amount of loan
Rate of interest
Date of repayment
Details of secured loans and security given
Particulars of share class rights
How many classes of share?
What are the rights for each class?
Which class has the majority of voting rights?
Any class with no voting rights
Transfer of shares
Is there an existing shareholders’ agreement containing share transfer restrictions?
Is there to be an initial period during which the transfer of shares will be prohibited?
Will there be an obligation to offer shares which are to be sold to the other shareholders before being offered to an unrelated person?
How will employees’ and/or directors’ shares be dealt with once the employee leaves the company or a director ceases to be a director?
Will the valuation of shares depend on the circumstances of departure?
Will the company have the option in the first instance to buy back the shares of a member who is leaving?
Future share issues
Will newly issued shares be offered to existing shareholders before being offered outside the company?
If so, will existing shareholders have the right to buy such shares in any amount other than their proportion of the current shareholding which they hold?
Does each shareholder have the right to appoint a director?
What is the quorum for a board meeting?
What is the quorum for a board meeting?
In the case of a board meeting, is the quorum a simple number or does it reflect the presence of the board appointee of each shareholder—and the procedure to be followed in the case of repeated non-attendance of any board member?
How often do board meetings have to be held?
Does the chairman of the board of directors have a casting vote?
Items requiring unanimity or a specified majority
In so far as this does not conflict with statutory provisions, which of the following issues require unanimity among the directors or the shareholders or both? If unanimity is not required is there a specified majority which would be necessary in each case:
Altering the issued share capital— do or should the Articles have a restriction on the number and/or value of shares which the company may issue?
Allotment of shares to new shareholders
Subdivision or consolidation of shares
Issue of bonus shares
Reduction of capital
Acquisition of shares in another company
Establishing a new office in the United Kingdom
Establishing a new office overseas
Entering into any onerous or long-term agreement and define those terms
Taking the company overseas
Authorising expenditure outside the budget and define the extent of such spending
Varying banking arrangements—additional accounts authorised signatories
Exceeding agreed borrowing limit
Making any loan
Taking any substantial loan or issuing a debenture or creating a mortgage and quantifying the extent of it
Paying a dividend or other distribution of profit
Establishing a new business
Changing the company or business name
Selling the business or disposing of any substantial assets and define that term
Giving any guarantee or other security
Altering the constitution of the company
Varying the voting or other rights attached to any class of shares
Appointing new directors
Removing a director
Increasing directors’ fees, salaries or other benefits (by more than a specified percentage)
Entering into any agreement with a director or connected person or shareholder or any other non- arm’s length contract
Recruiting, dismissing or varying the employment of any employee or senior employee (and a definition of that term, perhaps linked to salary level)
Agreeing to grant an option over the share capital
Registering a transfer of shares other than strictly in accordance with the terms of the Articles and/or the shareholders’ agreement
Settling any claims over a specified amount and define that term
Any others?
Financial matters
Requirement for formal budgets and business plans, their frequency and system for review and approval
Dividend policy6
Capital requirements
Obligation to provide further capital
Circumstances in which further capital may be required
Will there be an obligation to provide such capital in proportion to the original investment?
Does the bank require all or any of the shareholders to give a guarantee?
Which loans are subject to a guarantee by shareholders and / or directors
If only some of the shareholders / diretors are to give a guarantee will the other shareholders / directors indemnify them?
Will the shareholders all enter into employment contracts with the company?
Which directors’ have service contracts?

Voting deadlock
How will deadlocks be resolved:
By arbitration
By the chairman’s casting vote7
By termination of the agreement, involving winding up the company, or offering it to the shareholders to acquire at value?
Company protection
Which of the following protections are required in contracts with shareholders, directors and senior employees or other employees:
Restrictions after termination of the relationship with the company and any competing business interest of the outgoing director/employee
Should the company be made a party to the agreement to enforce post-termination covenants?
Provide an opportunity for the client to raise any other concerns which might be dealt with in the shareholders’ agreement (e.g. death of a shareholder)


Checklist Notes: 

  • This checklist is provided for the purposes of obtaining a customer’s instructions.
  • The customer’s responses will be taken into consideration in the preparation of requested documentation.
  • No warranty is given that the checklist is comprehensive in its questions or that it covers all of the customer’s requirements.
  • The customer is required to provide all relevant information in any event.
  • Documents prepared by contracts-direct.com are provided without legal advice.
  • Customers are recommended to obtain legal advice on their documentation.

By the publications team at: Contracts-Direct.com with the assistance of the referenced third parties (Lexis Nexis).

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Publisher: Atkins-Shield Ltd: Company No. 11638521
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Note: This publication does not necessarily deal with every important topic nor cover every aspect of the topics with which it deals. It is not designed to provide legal or other advice. The information contained in this document is intended to be for informational purposes and general interest only.


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