Shareholders agreement for a company with a lender

A company with a lender has a party above the shareholders whose consent is needed for many of the things a shareholders' agreement would otherwise decide, and whose covenants limit what the shareholders can take out. The agreement has to be written knowing what the facility already says, record the guarantees the shareholders have given and how they share them, set the dividend policy within the lender's covenants, deal with the lender's consent to transfers, and provide for enforcement and for the day the debt is repaid. Acting for all the shareholders together, I hold a briefing session, draft the agreement, and add a note on how the articles need to work with it; the fee is a fixed £995, delivered in five working days.

Who this is for

Shareholders in England and Wales in companies with bank loans, asset finance, invoice finance or private lenders, from a management team with a term loan to founders with a growth facility, who want the agreement between them to work alongside the debt.

What matters in a shareholders' agreement where there is a lender

What the facility already decides

The facility agreement and the security documents will contain covenants (financial ratios, restrictions on borrowing, disposals, dividends and acquisitions), events of default (including a change of control and a change of management), information undertakings and the lender's consent rights, and the shareholders' agreement should be drafted with those in front of it: the reserved matters should not purport to allow what the facility forbids, the lender's consents should be built into the decision process, and the agreement should say that where it conflicts with the facility the facility prevails as between the company and the lender, because a shareholders' agreement that ignores the facility is an agreement to default.

Personal guarantees and the shareholders' indemnities

Lenders to private companies take personal guarantees from directors and shareholders, often joint and several, so that one shareholder can be called for the whole debt, and the agreement should record each guarantee, provide for the shareholders to contribute to any guarantee payment in proportion to their shares (or as otherwise agreed where one has guaranteed and another has not), require the company and the other shareholders to indemnify a guarantor beyond their share, make new guarantees a reserved matter, and provide for release or replacement when a guarantor sells; the guarantee is where a shareholder's exposure exceeds their shares, and the indemnities are what make it proportionate.

Dividends, drawings and the lender's covenants

The facility will restrict or prohibit dividends while the debt is outstanding or while covenants are not met, and the dividend policy in the agreement should operate within that: distributions only where the facility permits and the company remains within its covenants after payment, directors' pay within any limit the lender has set, and shareholder loans subordinated to the lender as the facility requires, with the distribution rules in section 830 of the Companies Act 2006 applying in any event; shareholders who expect dividends from a geared company should see the facility's restrictions in the agreement rather than discover them from the finance director.

The lender's consent to transfers and changes of control

A transfer of shares that changes control, or the departure of a key director, is usually an event of default under the facility, so the agreement's transfer provisions (pre-emption, leaver provisions, drag-along, options) should be subject to the lender's consent where the facility requires it, with the shareholders obliged to seek it and the transfer conditional on it; the agreement should also say what happens if the lender refuses, because a leaver provision the lender will not allow to operate leaves the leaver as a shareholder.

Security over shares and what happens on enforcement

Lenders often take a charge over the shares themselves, registered under section 859A of the Companies Act 2006, with the shareholders agreeing that on enforcement the lender or its nominee may transfer the shares free of the agreement's restrictions, and the articles amended so that the directors cannot refuse to register the transfer; the agreement should record the charge, the shareholders' consent to enforcement transfers, and the position of the shareholders' own rights (pre-emption, drag, tag) against a lender's transferee, which the lender will usually require to be waived; the shareholders should understand that on enforcement the agreement protects them from each other, not from the lender.

Refinancing, repayment and getting the lender out

The agreement should say how the shareholders will decide to refinance, to repay early or to take on further debt (reserved matters, with the guarantees reconsidered), should provide for guarantees to be released on repayment and for the agreement's lender-related provisions to fall away when the debt is cleared, and should address a shareholder who wants to leave while the debt is outstanding and their guarantee cannot be released, which usually means an indemnity from the remaining shareholders and the company and a price that reflects the continuing exposure; the note on the articles addresses the transfer provisions and the lender's requirements 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 bank loan jointly with my co-shareholder. If the bank calls it, who pays?

The bank can call either of you for the whole. The agreement provides for contribution in proportion to your shares and an indemnity from the company and the other shareholder beyond your share. It cannot change the bank's rights; it allocates the cost between you.

Can we pay dividends while the loan is outstanding?

Only where the facility permits and the covenants are met after payment. The agreement's dividend policy operates within those limits and says so, so that the expectation is realistic.

A shareholder wants to leave but the bank will not release their guarantee. What happens?

The agreement provides for the remaining shareholders and the company to indemnify the leaver for the continuing guarantee, and for the price to reflect it. The bank's consent to the share transfer is also usually needed, and the agreement makes the transfer conditional on it.

Related guidance and services

• Shareholders agreement, £995, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Shareholders agreement with a shareholder loan
• Shareholders agreement for a management buyout team

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.