Shareholders agreement for a building company

Building companies are owned by the people who run the sites and the people who win and manage the contracts, with the owners' names on the guarantees, bonds and finance that let the company trade. The agreement has to divide the roles, control the cash that comes in late and goes out early, record who is personally exposed and how the others share it, deal with subcontractors and the owners' own trades, and settle what happens when an owner leaves in the middle of a contract or the company runs into the insolvency that ends many building firms. I draft that agreement for the owners together, with a briefing session and a note on how it fits the articles, for a fixed fee of £995, delivered in five working days.

Who this is for

Owners in England and Wales of building, construction, groundworks, electrical, plumbing, roofing and other trade contracting companies with more than one shareholder, from two tradesmen who went into business together to a family firm.

What matters in a building company shareholders' agreement

The owner on site and the owner in the office

The agreement should record each owner's role (site management, estimating and contracts, finance and administration), the authority each has (pricing a job, signing a contract above a value, hiring, buying plant), the reserved matters needing both or a stated majority (contracts above a stated value, borrowing, plant finance, guarantees, a new division, a sale), and how each is paid: a salary under a service agreement for the work and dividends for the ownership under a policy within section 830 of the Companies Act 2006; a building company whose owners both think they run it, or neither, is one that signs contracts it cannot deliver.

Contracts, retentions and the cash that arrives late

Construction contracts under the Housing Grants, Construction and Regeneration Act 1996 pay by stages with retentions held for months after completion, and the agreement should set the company's financial controls (who authorises payments, dual signatures above a limit, monthly accounts and cash flow to all owners), the owners' agreement on the credit the company gives and takes, the retention the company keeps before any dividend, and the process for pursuing retentions and adjudicating disputes under section 108 of that Act, which the office owner usually runs and the site owner usually ignores until the money is missing.

Guarantees, bonds and the owners' personal exposure

Lenders, landlords, plant finance companies, suppliers' credit accounts and performance bond providers ask owners for personal guarantees, and the agreement should record who has given what, require the company and the other owners to indemnify a guarantor for amounts paid beyond their share, make new guarantees a reserved matter, and provide for release or replacement when a guarantor sells; an owner who has guaranteed the overdraft while the other has not is carrying the company, and the agreement should say how that is shared.

Subcontractors, CIS and the owners' own trades

The company engages subcontractors under the Construction Industry Scheme in Chapter 3 of Part 3 of the Finance Act 2004 and under subcontracts the owners should approve as a standard form, with the subcontractors' status reflected in those agreements and checked with HMRC's tool rather than assumed; the agreement should also say whether an owner may trade on their own account in their trade outside the company (usually not, with an exception for stated work), and that work the owners do is done for the company at the company's prices, because an owner doing private jobs with the company's van and materials is a dispute in waiting.

An owner's departure part way through a contract

The agreement, with matching articles, should require an owner who leaves to transfer their shares at a stated valuation (work in progress and retentions make a building company's value hard to fix, and the formula should say how they are treated), with good and bad leaver terms, payment over time, and the leaver's obligations: to complete or hand over the sites they run, to remain on guarantees until released or indemnified, and not to solicit the company's clients, staff and subcontractors for a reasonable period; the departure of the owner who runs the sites in the middle of a contract is the event the agreement most needs to cover.

Growth, insolvency and sale

A new division, a second region or a larger contract than the company has done should be reserved matters, with the owners deciding the risk together; the agreement should address the directors' duties under the Insolvency Act 1986 when the company is in difficulty (building companies fail on cash flow, and a director who continues to trade when he should not is personally exposed), the owners' decision to stop, and the personal guarantees that will be called; and it should provide for a sale with drag-along and tag-along, with the note on the articles addressing the transfer provisions under section 33 of the Companies Act 2006.

What it costs

Shareholders agreement, £995. An agreement between the shareholders of a private company, with a note on how it interacts with your articles. Five working days.

Buying online forms the engagement on payment. The scope is what the shareholders agreement page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A briefing session with all shareholders together, to work through the questions people avoid asking each other
• A shareholders agreement drafted for your actual situation rather than a precedent with the names changed
• A note on how the agreement interacts with your articles, and whether the articles need amending to make it work
• A plain English explanation of every material choice, so nobody signs something they have not understood
• One round of amendments
• Signature-ready documents

What is not included

• Acting for individual shareholders separately, because I act for you jointly
• Company valuation
• Tax structuring, which needs your accountant and should run alongside this
• Amended articles of association and IP assignments, which I quote separately
• Filing at Companies House
• Resolving a dispute that has already started

Questions I am often asked

I guaranteed the plant finance and the overdraft. My partner guaranteed nothing. Is that fair?

The agreement cannot change what the lenders required, but it can require the company and your partner to indemnify you for amounts paid beyond your share, make new guarantees a joint decision, and provide for release when you sell. That is how the exposure is shared.

Can my partner do private jobs on the side?

Only if the agreement allows it, and most do not, because private work with the company's van, materials and reputation is the company's work. The agreement says what, if anything, is permitted.

What happens to the sites if my partner walks out mid-contract?

The agreement requires the leaver to complete or hand over the sites they run and to stay on guarantees until released, with their shares bought at a valuation that treats work in progress and retentions as stated. The company's obligations to its clients continue regardless.

Related guidance and services

• Shareholders agreement, £995, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Contractor agreement for a construction subcontractor
• Shareholders agreement for a property development company

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.