Shareholders agreement for a company with a corporate shareholder

When one of a company's shareholders is itself a company, the agreement is dealing with an owner that can be sold, that has its own owners and lenders, that may compete with or supply the company, and that appoints a director who owes duties to two companies at once. The agreement has to look through the corporate shareholder to the people behind it, manage the conflicts its director will face, regulate the dealings between the two companies, and deal with the day the corporate shareholder changes hands. For £995, fixed, and delivery in five working days, I draft the agreement for the shareholders jointly, starting with a briefing session and finishing with a note on its fit with the articles.

Who this is for

Founders and shareholders in England and Wales whose co-shareholder is a company (a corporate investor, a customer or supplier that took a stake, a holding company, a joint venture partner), and companies holding a stake in another business who want the terms right.

What matters in a shareholders' agreement with a corporate shareholder

Who the corporate shareholder really is

The agreement should identify the corporate shareholder's own owners and controllers, require it to disclose changes in its ownership, and treat a change of control of the corporate shareholder as an event the other shareholders may respond to, because the people the founders agreed to be in business with are the people behind the company and not the company; the register of persons with significant control that the Companies Act 2006 requires will show who controls the corporate shareholder, and the agreement should require the corporate shareholder to keep the company informed so that the register is accurate.

The corporate shareholder's director and the duties that conflict

A director appointed by a corporate shareholder owes the duties in the Companies Act 2006 to the company on whose board they sit, including the duty under section 175 to avoid conflicts of interest and the duty under section 177 to declare an interest in a proposed transaction, and cannot simply act on the corporate shareholder's instructions; the agreement should say what the director may report to the corporate shareholder, how conflicts are managed (disclosure, abstention, a committee of the other directors for transactions with the corporate shareholder), and that the corporate shareholder will not require its director to breach their duties, because a director who does is personally exposed and the corporate shareholder may be a shadow director under section 251.

Dealings between the company and its corporate shareholder

Where the corporate shareholder is also a customer, supplier, landlord or licensor of the company, the agreement should require those dealings to be on arm's length terms approved by the other shareholders or the independent directors as reserved matters, should set the terms of any existing arrangements (a supply agreement, a licence of the corporate shareholder's IP, shared services), and should say what happens to those arrangements if the corporate shareholder exits or the relationship ends; a corporate shareholder that extracts value through its trading relationship rather than through dividends is the risk the other shareholders should see coming.

A change of control of the corporate shareholder

The agreement should treat a change of control of the corporate shareholder (its sale to a competitor, its insolvency, a change in the people behind it) as a deemed transfer event or a trigger for the other shareholders' options: a right to buy the corporate shareholder's shares at a stated valuation, a right to terminate related trading arrangements, or a right to require the new controller to sign a deed of adherence and give stated assurances; without it, the founders can wake up with a competitor as their co-shareholder and no remedy.

Group guarantees, funding and the parent behind the shareholder

A corporate shareholder's obligations (to fund, to buy under a put, to indemnify) are only as good as the corporate shareholder's balance sheet, which may be a special purpose vehicle with nothing in it, and the agreement should require a guarantee from the corporate shareholder's parent or a credit-worthy group company where the obligations matter, should say whether the corporate shareholder's funding is equity or loan and on what terms, and should address the corporate shareholder's own lender, who may have security over its shares in the company and consent rights over their transfer; the other shareholders should know whose credit they are relying on.

Exit, competition and the corporate shareholder's other interests

The agreement should say whether the corporate shareholder may hold interests in competing businesses and what information it may use, within limits the Competition Act 1998 allows between shareholders who compete, should provide pre-emption, tag-along and drag-along that treat the corporate shareholder like any other shareholder, should address a transfer within the corporate shareholder's group as a permitted transfer on conditions (a guarantee from the transferor, return of the shares if the transferee leaves the group), and should provide a deadlock and exit mechanism suited to a shareholder that will take decisions by committee; the note on the articles addresses 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

Our investor is a company. Can its director on our board report everything back to it?

Not everything. The director owes duties to your company and must manage conflicts; the agreement says what may be reported and how transactions with the investor are approved. Routine reporting of the company's position is usual; acting for the investor against the company is not.

What if our corporate shareholder is bought by a competitor?

The agreement treats it as a change of control giving the other shareholders options: to buy the shares at a valuation, to end related trading arrangements, or to require assurances from the new owner. Without the clause there is no remedy.

The corporate shareholder is a shell. Is its promise to fund worth anything?

Only what is behind it. The agreement requires a parent company guarantee where the obligations matter, so that the other shareholders are relying on a balance sheet rather than a name.

Related guidance and services

• Shareholders agreement, £995, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Shareholders agreement for a joint venture company
• Shareholders agreement for a business with overseas shareholders

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.