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Joint Venture Solicitor | Shareholder Agreement Solicitors

Joint Ventures and Shareholders Agreements

What is a Shareholder Agreement?

A shareholders agreement refers to a contract made between the shareholders of a private company. This contract determines exactly how the shareholders will manage the company and regulates the roles and responsibilities of each shareholder.

The shareholders’ agreement or the articles of association, will govern things like:

  • Who will manage the company?
  • How the board of directors will be comprised.
  • How the venture is to be funded, both initially and on an ongoing basis.
  • What will the company do with its profits? Will it re-invest profits, distribute profits as dividends to shareholders, or a combination of both?
  • Will the shareholders be able to transfer their shares to a third party and if so on what terms?
  • Will there be any key management or operational decisions that can only be made by the shareholders unanimously?
  • What happens in the case of a shareholders’ deadlock?
  • When and how can the shareholders’ agreement be terminated?

 

What is a joint venture agreement?

A joint venture agreement is similar to a shareholder agreement in that it sets out the responsibilities, roles and obligations of each party to the joint venture. Parties to a joint venture will remain separate entities and the joint venture will usually only last for a specific period of time, for example, if the venture was set up to complete a project.

The joint venture agreement will set out issues such as:

  • Who will manage the joint venture?
  • Specific obligations and responsibilities of the joint venture parties
  • The duration of the agreement
  • How and when the joint venture agreement will be terminated

 

Shareholder agreement and joint venture solicitors

A shareholder and joint venture solicitor will be required to assist in the drafting, negotiation and to oversee the signing of these types of documents. They can also assist on a range of disputes that may arise from joint venture and shareholder agreements.

Our corporate and commercial team know that an expertly drafted shareholders’ agreement is essential to define and protect the rights of individuals and businesses looking to invest in a private limited company or enter into a corporate joint venture.

Without a shareholders’ agreement or joint venture agreement in place to govern such key aspects of the commercial relationship, when disputes arise, the rights of the parties are inevitably more uncertain.

Our shareholders’ agreement solicitors are alive to the commercial needs of both parties to the transaction. If our client is an investor seeking to inject much needed venture capital into a business, its negotiating position may be much stronger.

In any case our corporate lawyers can come on board early in the transaction, to conduct due diligence and ultimately draft, negotiate and oversee the signature of not only the shareholders’ agreement, but the ancillary documents that are often necessary to properly document the venture, such as:

  • Executive Service Agreements; where the terms of the deal require the employment, engagement, or commitment of certain key people to drive the business forward.
  • Option Deeds and Option Agreements; where some or all of the shareholders will have the right to acquire additional shares in the company at some future point, on terms that are pre-agreed.
  • Intellectual Property assignments and licences; where the joint venture deal is done on the basis that one party contributes valuable intellectual property, such as rights in software, for use by the venture.

Shareholder and joint venture disputes

Our shareholder dispute litigation team have expertise in disputes involving issues such as:

· 50/50 shareholder deadlocks– often arising where no written shareholders’ agreement exists, the shareholders cannot agree on how to take the company forward and no shareholder has the majority vote required to make key decisions. Communications between the parties have often broken down in these situations. Our corporate solicitors have negotiated amicable resolutions to the most difficult of 50/50 deadlock cases.

· Unfair prejudice claims– notwithstanding the existence of a shareholders’ agreement, shareholders can obtain statutory remedies under Part 30 of the Companies Act 2006, where the company’s affairs have been conducted in a manner that is unfairly prejudicial to the interests of shareholders. Unfair prejudice claims are common, especially in minority shareholder disputes, and courts have the power to order that an affected shareholder be bought out by the company or the other shareholders. If the court agrees that the shareholder is a victim of unfair prejudice, the judge can order remedies including unfair prejudice petitions and claiming for equitable winding.

· Disagreements as to funding– sometimes a joint venture will require further capital contributions from the shareholders or partners. Disputes can arise where there is no clear agreement as to how the venture will funded beyond initial capital contributions. Funding stalemates can destroy the value of a venture if they are not resolved efficiently.

. Derivative Actions – This is a type of negligence claim which can be brought against a director for breach of duty, usually brought under Part 11 of the Companies Act 2006

. Intellectual property disputes – A dispute may arise in a joint venture agreement regarding ownership of intellectual property created by one party to the agreement.

How can South Bank Legal, joint venture and shareholder agreement solicitors help?

South Bank Legal provides an expert corporate team with many years of experience providing advice and dispute resolution for shareholders and those involved in a joint venture agreement.

For expert legal advice from an experienced shareholders’ agreement solicitor, you can contact us for a confidential discussion today.

We are a specialist commercial law firm, registered in England and Wales and regulated by the Solicitors Regulation Authority.

 

Get in touch today

 

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