A shareholders agreement is a fundamental document which should be entered into between shareholders not only when setting up a new company but also in relation to shareholders in existing companies who may not have entered into such an agreement. The agreement is private (as opposed to the Articles of Association of a company which can be publicly inspected at Companies House) so can include clauses which shareholders may not want third parties to be aware of. The agreements can also contain important clauses that are usually absent from a company’s Articles such as restrictive covenants which can prevent shareholders (who may not also be directors) from competing with the interests of the company.
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