Articles of Association: equal 50/50 shareholders

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As an accompaniment to a shareholders agreement between two equal shareholders, the shareholders should also consider adopting Articles of Association which reflect their equal shareholdings.  This document is the form of Articles of Association for a private limited company with two equal shareholders. 

 

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Frequently Bought Together

Shareholders Agreement checklist: equal 50/50 shareholders

Equal shareholders in a company should consider having a shareholders agreement to regulate the management of the company and their relationship as shareholders. This checklist is for a shareholders agreement between two equal shareholders in a private limited company.

 

Shareholders Agreement: equal 50/50 shareholders

As equal owners of the business, provisions concerning control and management of the company should apply equally for the benefit of both shareholders.  As such, they should not be a matter of argument or dispute between the two equal shareholders (in the absence of other circumstances).  This agreement is a shareholders agreement between two equal shareholders in a private limited company. 

 

Employment Agreement: senior employee

A senior employee’s contract will contain additional terms which may not be applicable for a junior employee.

Articles of Association equal 50/50 shareholders

Articles of Association for a company owned by two equal shareholders

Background

When should Shareholders adopt Articles of Association?

As an accompaniment to a shareholders agreement between two equal shareholders, the shareholders should also consider adopting Articles of Association which reflect their equal shareholdings.

The shareholders agreement is a private agreement between the shareholders (and often the company as well).  The Articles of Association are filed at Companies House and available to the public.  

Typical matters covered by Articles of Association include provisions relating to:

  • the allotment of additional shares
  • transfers of shares
  • shareholder meetings
  • rights to appoint directors and proceedings of directors

About this document: Articles of Association equal 50/50 shareholders

This document is the form of Articles of Association for a private limited company with two equal shareholders.

Document features

  • the directors’ authority to allot further shares
  • provisions relating to the transfer of shares, including:
    • permitted transfers to defined classes of permitted transferees
    • pre-emption rights on the transfer of shares to third parties
    • compulsory transfer on a shareholder ceasing to be employed or breaching the shareholders agreement
    • tag-along and drag-along rights
    • the allotment of additional shares
  • regulation of shareholder meetings
  • as equal shareholders, rights of each shareholder to appoint an equal number of directors
  • provisions relating to the proceedings of board meetings
  • the regulation of directors’ conflicts of interest and transactions with directors

paperrockdocs Articles of Association: equal 50/50 shareholdersExplanatory guidance

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