How to Use This Checklist
Click each checkbox to mark items as complete. Your progress is automatically saved to your browser. Use this checklist to:
✅ Three Ways to Use This Tool
1. Audit existing agreements: Review your current shareholders agreement against all 52 compliance points
2. Draft new agreements: Ensure you don't miss any essential legal requirements for investor protection
3. Compare with solicitor drafts: Verify your lawyer has included all critical shareholder protections
⚠️ Understanding Importance Levels
🔴 Critical: Must have - omission creates serious legal or commercial risk
🟡 Important: Should have - recommended for proper protection and governance
🔵 Recommended: Best practice - enhances clarity, enforceability, and dispute prevention
1. Company Identification (4 items)
Company's Full Legal Name
Must exactly match Companies House registration. Include "Limited" or "Ltd" as registered. Critical for enforceability and clarity on which legal entity is bound.
🔴 Critical
Company Registration Number
Eight-digit Companies House number. Absolutely identifies the correct legal entity and prevents confusion with similarly-named companies.
🔴 Critical
Registered Office Address
Official registered address as shown on Companies House. Required for service of legal notices and determining jurisdiction.
🔴 Critical
Agreement Execution Date
Date when all parties sign. Determines when obligations begin and is the start date for calculating all time periods and deadlines.
🔴 Critical
2. Shareholder Details (5 items)
Full Legal Names of All Shareholders
Complete legal names as they appear on ID documents. For corporate shareholders, use full registered company name. Must match share register.
🔴 Critical
Full Addresses for Each Shareholder
Residential address for individuals, registered office for companies. Essential for service of notices, particularly termination and transfer notices.
🔴 Critical
Number of Shares Held by Each Shareholder
Exact number of shares owned. Critical for calculating voting rights, pre-emption allocations, dividend distributions, and determining control thresholds.
🔴 Critical
Ownership Percentage Calculations
Calculate and state each shareholder's percentage holding. Makes rights thresholds (25%, 50%, 75%) immediately clear for reserved matters and control rights.
🟡 Important
Share Classes Held by Each Shareholder
Ordinary, Preference, A Ordinary, etc. Different classes may have different rights (voting, dividends, liquidation priority). Must be clearly stated.
🔴 Critical
3. Share Capital Structure (5 items)
Total Issued Share Capital (£)
Nominal value of all issued shares (e.g., £100 for 100 × £1 shares). Must match Companies House records. Forms basis for share valuations and transactions.
🔴 Critical
Total Number of Shares in Issue
Total shares currently in existence. Critical baseline for calculating dilution on new issues and determining when to grant rights based on shareholding thresholds.
🔴 Critical
Nominal Value Per Share
Face value of each share (typically £1 or £0.01). Determines minimum issue price and is relevant for stamp duty calculations on transfers.
🟡 Important
Share Class Rights Definition
Clear statement of voting, dividend, and capital rights for each share class. Ordinary shares = 1 vote each. Preference shares may have priority dividends or liquidation preferences.
🔴 Critical
Share Certificate Issuance Obligation
Company must issue share certificates within 2 months of allotment or transfer (Companies Act requirement). Without certificates, shareholders lack proof of ownership.
🟡 Important
⚡
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4. Board Composition & Management (6 items)
Minimum and Maximum Board Size
Specify range (e.g., "not less than 2, not more than 5 directors"). Prevents board becoming too large or unworkable, while ensuring Companies Act minimum of 1 director is exceeded for governance.
🟡 Important
Board Appointment Rights
Shareholders with 25%+ can appoint a director; 50%+ can appoint two. Gives minority shareholders direct oversight and prevents majority excluding them from management visibility.
🔴 Critical
Director Removal Rights
Directors appointed by a shareholder can only be removed by that appointing shareholder. Protects minority board representation from being voted off by majority.
🔴 Critical
Chairman Appointment and Casting Vote
Board appoints Chairman who has casting vote in deadlock. Essential for breaking 50/50 board ties. Without this, deadlocked boards cannot make decisions.
🔴 Critical
Board Meeting Frequency and Notice
Board meets at least quarterly with 7 Business Days notice. Ensures regular governance oversight and all directors have fair opportunity to attend and prepare.
🟡 Important
Board Quorum Requirements
Typically 2 directors or majority of board. Prevents single director making decisions alone but allows board to function even if one director unavailable.
🟡 Important
⚡
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5. Reserved Matters (12 items)
⚠️ Why Reserved Matters Are Critical
Without reserved matters requiring 75% approval, majority shareholders can make fundamental changes that destroy minority value (issue new shares to dilute them, change business, sell assets, take on massive debt). Reserved matters are your primary minority protection.
Altering Share Capital or Rights
Requires 75% approval to change share capital, create new share classes, or modify rights attached to shares. Prevents majority from creating super-voting shares or stripping minority rights.
🔴 Critical
Issuing New Shares or Securities
75% approval required for new share issues. Combined with pre-emption rights, prevents dilution of minorities. Without this, majority can dilute you to insignificance.
🔴 Critical
Large Dividend Declarations
Dividends exceeding 50% of annual profits need 75% approval. Prevents majority extracting all profits and leaving nothing for reinvestment or emergency reserves.
🟡 Important
Major Borrowing Threshold
Borrowing over £100,000 (or appropriate threshold) requires 75% approval. Prevents majority taking on unsustainable debt that endangers the business and shareholder value.
🔴 Critical
Acquiring or Disposing Material Assets
75% approval for asset transactions over £50,000 threshold. Prevents selling core business assets or making huge acquisitions without minority consent.
🔴 Critical
Changing Business Nature
Cannot change fundamental business nature without 75% approval. If you invested in a software company, majority can't pivot to property development without your consent.
🔴 Critical
Appointing or Removing Auditors
75% approval to change auditors. Prevents majority appointing compliant auditors who might overlook financial irregularities or aggressive accounting.
🟡 Important
Voluntary Winding Up
75% approval needed to voluntarily wind up company. Prevents majority forcing liquidation when minorities want business to continue or might value it differently.
🔴 Critical
Related Party Transactions
Agreements with shareholders or connected persons need 75% approval. Prevents self-dealing where majority shareholders award themselves contracts on unfavorable terms to company.
🔴 Critical
Granting Security Over Assets
75% approval to grant charges, mortgages, or security over company assets. Prevents pledging company assets as security for loans without minority agreement.
🔴 Critical
Political Donations
75% approval for political donations. Prevents using company funds for political purposes minorities may not support, and avoids reputational risk.
🔵 Recommended
Amending Agreement or Articles
Changes to shareholders agreement or articles require 75% approval. Prevents majority unilaterally removing protections you negotiated when investing.
🔴 Critical
6. Transfer Restrictions (4 items)
General Transfer Restriction
No shareholder may transfer shares except as permitted by agreement. Foundation for all transfer controls. Without this, pre-emption and other rights are meaningless.
🔴 Critical
Permitted Transfers Definition
Free transfers to: family (spouse, children, parents, siblings), personal trusts, other existing shareholders, or with 75% shareholder consent. Balances control with family succession/estate planning.
🔴 Critical
Restriction on Charging Shares
Shareholders cannot grant security over shares without consent. Prevents lenders foreclosing on shares and unwanted third parties becoming shareholders through default.
🟡 Important
Consequences of Breach
Specify that transfers in breach are void and company will not register them. Makes restrictions enforceable and prevents circumvention through purported transfers.
🔴 Critical
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7. Pre-emption Rights on Transfer (5 items)
Transfer Notice Procedure
Selling shareholder must serve written Transfer Notice stating: number of shares, proposed price, buyer identity. Company notifies others within 5 Business Days. Creates structured process for transfers.
🔴 Critical
Acceptance Period (20 Business Days)
Other shareholders have 20 Business Days to accept offer. Reasonable time to arrange financing and make decision, but prevents indefinite blocking.
🟡 Important
Pro Rata Allocation
If multiple shareholders want to buy, shares allocated pro rata to existing holdings. Fair system that maintains relative ownership positions.
🟡 Important
Third Party Sale Rights
If not fully taken up, seller can transfer to named third party at same/better price within 3 months. Ensures pre-emption doesn't trap shareholders but controls who enters.
🔴 Critical
Fair Value Dispute Resolution
If price disputed, independent chartered accountant determines value. Prevents artificial pricing to circumvent pre-emption or force unfair terms.
🟡 Important
8. Pre-emption Rights on New Issues (4 items)
Offer to Existing Shareholders First
New shares must be offered to existing shareholders before outsiders. Prevents dilution of ownership percentage. Critical protection for all shareholders.
🔴 Critical
Pro Rata Allocation Terms
New shares offered pro rata to existing shareholdings at Board-determined price (or independent valuation). Allows shareholders to maintain their percentage ownership.
🔴 Critical
14 Business Day Acceptance Period
Shareholders have 14 days to accept offer. Reasonable time to arrange funds without delaying fundraising excessively.
🟡 Important
Exceptions for Employee Schemes
Pre-emption waived for shares issued under employee share schemes approved by 75%. Allows incentivizing staff without triggering pre-emption each time.
🔵 Recommended
9. Tag-Along Rights (3 items)
✅ Why Tag-Along Protects Minorities
Without tag-along, majority shareholders can sell to a buyer at premium price, leaving minorities stuck with new controlling shareholder they didn't choose, at potentially worse valuation. Tag-along ensures minorities aren't left behind.
Trigger Threshold (50%+ Sale)
Tag-along activates if shareholder receives offer for 50%+ of their shares. Ensures minorities can exit when control is changing hands.
🔴 Critical
Notice and Election Period
Selling shareholder notifies others within 5 days. Other shareholders have 14 days to elect to include their shares on identical terms. Clear procedure prevents disputes.
🔴 Critical
Sale Cannot Complete Without Tag-Along
If minorities tag along, sale can't complete unless buyer purchases their shares too. Makes tag-along enforceable and prevents circumvention.
🔴 Critical
10. Drag-Along Rights (3 items)
⚠️ Why Drag-Along Exists
Without drag-along, tiny minority shareholders can block valuable sales by refusing to sell. Drag-along (typically 75% threshold) ensures overwhelming majority can accept good exit opportunities without being held hostage by holdouts.
Majority Threshold (75%+)
If 75%+ shareholders agree to sell all their shares, they can force minorities to sell too. High threshold ensures genuine consensus while preventing small blockers.
🔴 Critical
30 Business Days Notice
Minorities get 30 days notice before completion. Reasonable time to review terms, seek advice, arrange for payment receipt. Prevents surprise forced sales.
🟡 Important
Fair Market Value Requirement
Price must represent fair market value. Minorities can't be forced to sell at undervalue. If disputed, independent valuation determines price.
🔴 Critical
⚡
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11. Compulsory Transfer Provisions (3 items)
Trigger Events Definition
Compulsory sale triggered by: bankruptcy, material breach, death, loss of director position, criminal conviction. Protects remaining shareholders from unsuitable co-owners.
🔴 Critical
Bad Leaver vs Good Leaver
Bad leavers (fired for cause, breach) may get lower valuation (e.g., nominal value). Good leavers (resignation, retirement) get fair value. Deters misconduct while treating genuine exits fairly.
🟡 Important
Valuation and Payment Terms
Specify valuation method (independent accountant) and payment terms (30 days or installments). Clear process prevents disputes when compulsory transfer needed.
🟡 Important
12. Dividend Policy (2 items)
Minimum Dividend Commitment
Company commits to distribute at least 30% of annual profits after tax (or agreed percentage) as dividends. Ensures shareholders receive regular returns rather than indefinite profit retention.
🟡 Important
Lawful Dividend Requirements
Dividends only paid if: sufficient distributable reserves exist, directors reasonably believe company can pay debts, and complies with Companies Act. Protects company solvency.
🔴 Critical
13. Restrictive Covenants (4 items)
Non-Compete Covenant
Shareholders can't compete with company's business during shareholding and for 12 months after. Prevents insider competition using knowledge gained. Must be reasonable in scope/duration to be enforceable.
🟡 Important
Non-Solicitation of Customers
12 months post-exit, can't solicit company customers. Protects customer relationships from former shareholders poaching them for competing ventures.
🟡 Important
Non-Solicitation of Employees
12 months post-exit, can't hire company employees. Prevents key staff being poached by former shareholders. Must be limited to employees worked with to be reasonable.
🔵 Recommended
Confidentiality Obligations
Must keep company confidential information secret during and after shareholding. Indefinite for trade secrets, 3-5 years for general business info. Protects sensitive company information.
🔴 Critical
14. Legal Formalities (6 items)
Agreement Precedence Over Articles
States that if conflict between shareholders agreement and articles, shareholders agreement prevails. Critical because articles are public; shareholders agreement is private and more flexible.
🔴 Critical
Entire Agreement Clause
This agreement constitutes entire agreement, superseding all prior negotiations. Prevents "but you said..." claims based on pre-contract discussions.
🟡 Important
Governing Law and Jurisdiction
Specify England & Wales law governs and English courts have jurisdiction. For UK companies with UK shareholders, English law is standard and ensures predictability.
🔴 Critical
Notices Provisions
How notices must be served (email, recorded delivery, to specified addresses). Critical for termination notices, transfer notices, and all formal communications.
🟡 Important
Variation Clause
Changes must be in writing signed by all parties. Prevents informal variations and disputes about whether agreement was modified.
🟡 Important
Execution by All Parties
All shareholders and company must execute agreement with proper signatures, dates, witness signatures where required. Agreement not binding until properly executed.
🔴 Critical
Next Steps
Now that you've reviewed the compliance checklist, you have three options:
✅ Use Our Ready-Made Template (Recommended)
Save days of legal research and drafting. Our professionally-crafted shareholders agreement covers all 52 compliance points with investor-grade protections. Available in both Interview Mode (guided questions) and Editor Mode (direct editing) for just £10.
📝 Draft Your Own Agreement
Use this checklist as your guide, but remember: shareholders agreements are highly technical. Getting pre-emption mechanics, drag-along thresholds, and reserved matters correct requires precise legal wording. A single drafting error can make protections unenforceable or create unintended consequences.
⚖️ Book a Legal Consultation
For complex ownership structures, investor rights, or high-value shareholdings, consider booking a consultation with our legal professionals for personalized advice tailored to your specific circumstances.