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Shareholder Buyout Agreement

Shareholder Buyout Agreement Template for England and Wales

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Key Requirements PROMPT example:

Shareholder Buyout Agreement

"I need a Shareholder Buyout Agreement for my tech startup where two founding shareholders are buying out the third founder's 25% shareholding for £500,000, with completion planned for March 2025. The selling shareholder will remain as CTO for 12 months post-completion."

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Document background
A Shareholder Buyout Agreement is essential when a shareholder wishes to exit a company by selling their shares to remaining shareholders or the company itself. This document, governed by English and Welsh law, outlines the complete transaction process, including valuation methods, payment terms, and any continuing obligations. It's particularly crucial for private companies where share transfers need careful structuring to maintain business continuity and protect all parties' interests. The agreement ensures compliance with company articles, shareholders' agreements, and relevant corporate legislation.
Suggested Sections

1. Parties: Identification and details of all parties involved in the buyout

2. Background: Context of the agreement and current shareholding structure

3. Definitions: Key terms used throughout the agreement including relevant legislation (Companies Act 2006, Financial Services and Markets Act 2000)

4. Sale and Purchase: Core terms of the share transfer including the exact shares being sold

5. Consideration: Purchase price, payment terms, and any adjustments to the consideration

6. Completion: Process and requirements for completing the transaction, including timing and deliverables

7. Warranties: Standard warranties from seller regarding shares and company status

8. Tax Covenants: Provisions relating to tax liabilities and indemnities

9. Confidentiality: Obligations regarding confidential information and announcements

10. General Provisions: Standard boilerplate clauses including governing law and jurisdiction

Optional Sections

1. Non-Compete Provisions: Restrictions on seller's future business activities, used when preventing seller from competing post-sale

2. Employee Provisions: Terms relating to ongoing employment or directorship, used when seller remains involved in the business

3. Earn-out Provisions: Mechanism for additional payments based on future performance, used when consideration includes performance-based elements

4. Intellectual Property Rights: Special provisions for IP transfer and protection, used when company has significant IP assets

Suggested Schedules

1. Schedule 1 - Share Details: Detailed description of shares being transferred including class, number, and nominal value

2. Schedule 2 - Completion Requirements: Comprehensive list of documents and actions required at completion

3. Schedule 3 - Warranties: Full list of warranties given by the seller regarding the company and shares

4. Schedule 4 - Company Information: Key company details, financial information, and material contracts

5. Schedule 5 - Tax Covenant: Detailed tax indemnities and related provisions

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓƵ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
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Industries

Companies Act 2006: Primary legislation governing company operations, including share capital and transfer provisions, directors' duties, pre-emption rights, and regulations regarding company articles and shareholders' agreements

Financial Services and Markets Act 2000: Regulatory framework for financial activities and transactions related to share transfers and company ownership

Corporation Tax Act 2010: Legislation governing tax implications and considerations for share transfers and company restructuring

Law of Property (Miscellaneous Provisions) Act 1989: Fundamental contract law provisions affecting the formal requirements for the buyout agreement

Employment Rights Act 1996: Legal framework protecting employment rights when a selling shareholder is also an employee

Transfer of Undertakings (Protection of Employment) Regulations 2006: Regulations protecting employees' rights during business transfers or restructuring

Competition Act 1998: Legislation ensuring the buyout doesn't create anti-competitive market conditions

Enterprise Act 2002: Additional competition law considerations for business transfers and market impact

UK GDPR and Data Protection Act 2018: Data protection requirements for handling personal and business information during the buyout process

Anti-Money Laundering Regulations 2017: Compliance requirements for due diligence and verification of funds in share transactions

Stamp Duty Reserve Tax Regulations: Tax regulations governing stamp duty obligations on share transfers and documentation

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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