Limited company guide
When a UK limited company needs a shareholders' agreement, what it should cover, how it differs from the articles, and the clauses that matter most in a founder dispute.
Short answer
Any company with more than one shareholder should have a shareholders' agreement. The articles set out the company's constitution and are public; the agreement is a private contract between shareholders covering vesting, decision-making, share transfers, deadlock and exit. Without one, a 50:50 company in dispute has almost no route forward short of litigation.
Written and reviewed by Waqas Sagar Member of ICAEW, Fellow of ACCA, Fellow of AAT, a double graduate and entrepreneur at heart, helping startups grow and serving thousands of businesses nationwide with an excellent team. Published by LimitedCompany.Accountants, 12 London Road, Morden, London SM4 5BQ. Reviewed 12 September 2026 against 2026/27 UK rates and current Companies House and HMRC guidance.
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QuickBooks PartnerCertified ProAdvisor100+ yearsCombined team experienceFully insuredUp to £2m indemnityAny company with more than one shareholder should have a shareholders' agreement. The articles set out the company's constitution and are public; the agreement is a private contract between shareholders covering vesting, decision-making, share transfers, deadlock and exit. Without one, a 50:50 company in dispute has almost no route forward short of litigation.
Agreement versus articles
The clauses that earn their keep
The 50:50 problem
When it can wait, and when it cannot
Before you act
The articles are filed at Companies House and anyone can read them. The shareholders' agreement is private and can contain commercially sensitive terms such as vesting schedules, salaries and restrictive covenants.
The two must be consistent. Where they conflict, the articles generally govern the company's internal workings while the agreement binds the parties who signed it, which produces a mess. Draft them together.
Founder vesting and good leaver / bad leaver terms. Reserved matters that need unanimous or supermajority consent. Pre-emption on share transfers so shares cannot be sold to a stranger. Drag-along and tag-along so a majority sale is possible and a minority is protected.
Deadlock resolution for 50:50 companies, dividend policy, what happens on death or incapacity, and restrictive covenants limiting a departing shareholder from competing or poaching.
Two equal shareholders who fall out cannot pass an ordinary resolution, cannot remove each other and cannot force a sale. The company can be paralysed while liabilities keep accruing.
A deadlock clause — mediation, then a shoot-out or a put and call mechanism — is the difference between a difficult conversation and a winding-up petition.
A single-shareholder company does not need one. Two or more shareholders, family members included, should have one in place before the first significant contract or hire.
If you are raising investment, the investor will bring their own document. It is much easier to negotiate from an existing sensible agreement than from nothing.
Rates, thresholds and deadlines quoted here reflect the 2026/27 UK tax year. Check current GOV.UK guidance, or ask us, before relying on them for your own company.
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We work with company directors across London and Surrey from our office at 12 London Road, Morden, London SM4 5BQ. Pick your area, or send the form below and we will call you back.
Frequently asked
No. It is optional, but for any company with more than one shareholder it is the document that decides how a dispute ends.
No. It is private between the parties, which is one of its advantages over the articles.
Templates exist, but the clauses that matter — vesting, leaver provisions, deadlock — are the ones templates handle worst. Have a solicitor review it.
Family companies produce some of the most damaging disputes precisely because nothing was written down. Yes.
Keep bank statements, sales and platform reports, purchase invoices, payroll records, VAT workings, finance agreements and Companies House correspondence. We confirm the exact list at onboarding and identify gaps before a filing deadline becomes urgent.
The fee depends on transaction volume, record quality, VAT and payroll requirements, historic catch-up and the level of reporting needed. We agree a fixed scope and price before technical work starts, with published packages available on our fees page.
Yes. We request professional clearance, collect the prior records and authorities, check the next Companies House and HMRC deadlines, and give you one clear handover list. The process is normally completed remotely.
Yes. We work through secure cloud records, scheduled reviews and digital approvals, while keeping a named team available by phone, video call and email. Clients can also visit our Morden office by appointment.
We regularly work with Xero, QuickBooks, FreeAgent, Sage and connected sales or expense apps. The right setup depends on transaction volume, integrations and the reports you need, not simply the software brand.
The relevant calendar may include annual accounts, Corporation Tax payment and return dates, confirmation statements, VAT returns, payroll submissions and Self Assessment. We map the dates from your company year end and registrations.
Included approach
Check the current rules
Deadlines, thresholds and filing rules change. GOV.UK and Companies House publish the current statutory position; advice should then be applied to your company’s circumstances.
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