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Shareholder Agreement Shares
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Shareholders Agreement: Shares

People invest substantial time and money setting up a business with others using a private limited company as the trading entity. Shares will usually be issued to those persons, who are known as shareholders. Shareholders do not manage the business of the company, which is carried out by the Directors. However shareholders do enjoy certain rights under common law depending on the number of shares held.

Click here to see a list of the rights of shareholders without a shareholders agreement

Articles of Association

The process to register a company is standardised and most companies will be incorporated with standard Articles of Association (known as Model Articles) which is one of the constitutional documents regulating the management and structure of the company. The Articles of Association regulate the affairs of the company including, for example, powers of directors, meetings of directors and shareholders and rights to a dividend payment.

The Articles of Association are filed at Companies House and each shareholder in the company subscribes to, and is obliged to act in accordance with, the Articles of Association. Therefore the Articles of Association create a contract between the shareholders and the company. Companies do have the ability to adopt bespoke "non-standardised" Articles of Association, rather than the Model Articles, to deal with any specific regulation between the shareholders.

However, the drafting of bespoke "non-standardised" Articles is restricted by the relevant provisions of the Companies Acts and it is a public document and therefore open to inspection.


A shareholders agreement provides confidential and legally binding protection for the shareholders which is not provided under general law or regulation.