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50 50 Shareholder Agreement Template for England and Wales

A 50/50 Shareholder Agreement under English and Welsh law is a legally binding document that establishes the rights, responsibilities, and obligations between two equal shareholders in a company. It governs crucial aspects such as decision-making processes, dispute resolution mechanisms, share transfer restrictions, and management rights. The agreement is particularly important in ensuring business continuity and preventing deadlock situations in equally-owned companies.

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What is a 50 50 Shareholder Agreement?

A 50/50 Shareholder Agreement is essential when two parties hold equal shares in a company governed by English and Welsh law. This document becomes particularly crucial as it provides a framework for managing potential deadlock situations and ensuring smooth business operations. The agreement typically includes provisions for decision-making, dispute resolution, share transfers, and exit strategies. It should be implemented at the company's formation or when the shareholding structure becomes equally split between two parties. The agreement helps prevent business paralysis and provides clear mechanisms for resolving disputes that may arise between the equal shareholders.

What sections should be included in a 50 50 Shareholder Agreement?

1. Parties: Identification and details of the shareholders entering the agreement

2. Background: Context of the agreement and company information

3. Definitions: Key terms used throughout the agreement

4. Share Ownership: Details of shareholding structure and share classes

5. Management and Decision Making: Procedures for company management and voting rights

6. Transfer of Shares: Rules and restrictions on share transfers

7. Deadlock Resolution: Procedures for resolving 50/50 shareholder disputes

What sections are optional to include in a 50 50 Shareholder Agreement?

1. Non-Compete Provisions: Restrictions on competitive activities - use when shareholders may have competing business interests

2. Dividend Policy: Agreement on distribution of profits - use when specific dividend arrangements are required

3. Exit Provisions: Procedures for shareholder exit - use when specific exit mechanisms are needed

4. Tag-Along/Drag-Along Rights: Rights regarding sale to third parties - use when future sale possibilities need to be addressed

What schedules should be included in a 50 50 Shareholder Agreement?

1. Share Certificate: Copy of share certificates or share register

2. Company Information: Details of company registration and structure

3. Business Plan: Initial business plan and strategy

4. Valuation Methodology: Agreed methods for share valuation

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

England and Wales

Publisher

Ƶ

Cost

Free to use

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