Shareholders agreement for a consultancy owned by its consultants

A consultancy owned by its consultants is a partnership in the shape of a company: the shareholders are the fee earners, the shares follow the work, and the value is tied to the people in it. The agreement has to tie the shares to working in the business, provide for new consultants to buy in and leavers to be bought out at a price the company can pay, share the profits in a way the consultants accept, and protect the clients when a consultant leaves. I draft that agreement for the consultant shareholders 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

Consultancies, agencies, advisory firms and professional practices in England and Wales owned by some or all of the people who work in them, whether moving from a partnership to a company or formalising what the founders built.

What matters in a consultant-owned company's shareholders' agreement

Shares tied to working in the business

The agreement, with matching articles, should provide that only working consultants hold shares, that a consultant who ceases to work in the business must offer their shares to the company or the remaining shareholders, and that the shares carry no right to remain a shareholder after leaving; a consultant-owned company with former consultants as shareholders becomes a company run for people who no longer contribute, and the compulsory transfer on leaving is the clause that prevents it, drafted with the leaver categories and the valuation stated.

Bringing in new consultant shareholders and buying out leavers

New consultants should be able to buy in at a stated valuation or formula, by subscription for new shares or by purchase from existing shareholders, with the approval of a stated majority, and leavers should be bought out by the company under section 690 of the Companies Act 2006 where it has the profits, or by the remaining shareholders, with payment by instalments over a stated period so that a departure does not strain the company; the agreement should set the mechanics so that the shareholder base can change without renegotiating the deal each time.

Profit sharing, drawings and the dividend policy

Consultant shareholders are paid for their work through salary under service agreements and for their ownership through dividends, and the agreement should set the dividend policy (a stated proportion of distributable profits after retaining what the business needs, within section 830 of the Companies Act 2006), the process for setting salaries and any performance-related element, and whether profits are shared in proportion to shares or by a formula reflecting fees generated; a consultancy that shares profits by shares when fees are generated unequally will lose its best fee earners, and the agreement should match the money to what the consultants believe is fair.

Clients, non-solicitation and protecting accounts on departure

The clients are the company's, and the agreement should impose on each shareholder, as a shareholder, a non-solicitation of clients and staff for a reasonable period after they cease to hold shares, and a non-compete only where the business can justify one, with the covenants mirrored in the service agreements; covenants given by a shareholder in a shareholders' agreement are enforced more readily than those in an employment contract because they protect the goodwill the shareholder owns, which is why they belong here. Leaver provisions should treat a consultant who leaves and takes clients as a bad leaver.

Decision making among equals

Where several consultants hold similar stakes, the agreement should set reserved matters requiring a stated majority (admitting a shareholder, changing the profit share, borrowing, selling the business, changing the articles), delegate management to a board or a managing consultant with defined authority, provide for the board's composition and rotation, and contain a deadlock mechanism; a consultancy run by committee does not run, and one run by a founder who no longer generates the fees is resented, and the agreement should give the consultants a structure they will accept.

Valuation and the price for a departing consultant's shares

The valuation of a consultancy is the valuation of its people, and the agreement should set a formula (a multiple of maintainable profits, net assets plus a goodwill figure, or an accountant's determination on a stated basis) that the consultants accept as fair for both buying in and being bought out, with a discount for bad leavers and no minority discount for good leavers, and should say that the price is paid over time from profits; the note on the articles addresses the compulsory transfer provisions the structure needs 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

A consultant shareholder wants to leave and keep her shares. Can she?

Not if the agreement and the articles require a leaver to transfer, which they do. She is bought out at the price the leaver category sets, over the period stated.

How should we share the profits?

By a method the consultants accept as fair: by shares, by fees generated, or a mixture. The agreement records the method and the process for changing it, and the briefing session is where it is decided.

Can we stop a leaver taking her clients?

With a non-solicitation given as a shareholder, for a reasonable period, yes, and the agreement contains one. It is enforced more readily than a covenant in an employment contract because it protects goodwill she owned.

Related guidance and services

• Shareholders agreement, £995, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Shareholders agreement for an agency owned by its directors
• Shareholders agreement when converting a partnership to a 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.