Shareholders agreement for a family company

A family company has shareholders who did not choose each other and cannot easily sell, who are related in ways the Companies Act does not recognise, and who will pass their shares to people the rest of the family have not met. A shareholders' agreement for a family company keeps the shares in the family, separates the family members who run the business from those who only own it, deals with dividends and fairness, and provides for the deaths, divorces and disputes that every family has. I draft that agreement for the family 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

Families in England and Wales owning a trading company together across one or two generations, whether the founder is still in charge, the children have taken over, or cousins now hold shares, who want the rules written down while the family is on good terms.

What matters in a family company shareholders' agreement

Keeping shares in the family and transfers to the next generation

The agreement, with matching articles, should define the family (descendants, spouses or not, trusts for family members) and permit transfers within it without pre-emption, require any other transfer to be offered first to the family shareholders and then to the company, and set the valuation for a family member who wants out; it should also provide for gifts to the next generation, which the family's advisers will structure for capital gains tax (holdover relief under section 165 of the Taxation of Chargeable Gains Act 1992 may apply to gifts of business assets) and inheritance tax, with the agreement recording the mechanism and the tax advice sitting alongside it.

Who runs the company and who only owns it

The agreement should distinguish shareholders who work in the business from those who do not, say who sits on the board and how directors are appointed and removed (with the note on the articles addressing section 168 of the Companies Act 2006 and weighted voting if the family wants a founder protected), reserve the decisions that need the wider family's consent, and set out what the non-working shareholders receive by way of information and dividends; a family that confuses ownership with management argues about both, and the agreement should separate them.

Dividends, salaries and fairness between family members

Working family members are paid salaries under service agreements set by a stated process rather than by themselves, non-working members receive their return through dividends, and the agreement should set a dividend policy (a stated proportion of profits after retaining what the business needs, decided by the board within the policy) so that the family members who own without working are not dependent on the goodwill of those who run it; benefits in kind, family members' employment and the employment of the next generation should follow policies the agreement refers to.

Death, divorce and the shares that could leave the family

On a shareholder's death the agreement should provide for the shares to pass within the family under their will or, where they would pass outside it, for the family or the company to buy them at a stated valuation, with the family's advisers addressing business property relief under Chapter I of Part V of the Inheritance Tax Act 1984, which changed this year and now needs planning for larger holdings; on divorce a court can take a family member's shares into account under section 25 of the Matrimonial Causes Act 1973, and the agreement's transfer restrictions, valuation and the family's pre-emption rights are what keep the shares within the family while the court deals with value.

Disputes and how the family resolves them

Family disputes are worse than commercial ones because the parties will meet at Christmas, and the agreement should provide an escalation: a family council or meeting, an independent chair or adviser, mediation, and a buy-out mechanism as the last resort, with the valuation and payment terms set; it should also say that a shareholder's remedy for unfair prejudice under section 994 of the Companies Act 2006 remains available, because it does, and should make the agreement's own process the first resort rather than the only one.

The tax and succession advice that runs alongside

The agreement records what the family has decided; the family's accountants and, where needed, a tax adviser structure the gifts, the share classes, the trusts and the reliefs, and the agreement should be drafted to accommodate what they recommend (different share classes for working and non-working members, a trust as shareholder, a family investment company) rather than to pre-empt it. The note on the articles addresses the changes the articles need, which are quoted separately, and the agreement is reviewed when the family's position changes.

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

Can the agreement stop a family member leaving their shares to someone outside the family?

It can require shares passing outside the defined family to be offered to the family or the company at a stated valuation, with the articles supporting it. It cannot override a will, but it can decide what happens to the shares afterwards.

My brother runs the company and I own a third. How do I get a return?

Through a dividend policy the agreement sets, decided by the board within the policy, and information rights that let you see the accounts. The agreement separates the salary your brother earns for working from the dividends you both receive for owning.

Do you advise on the inheritance tax?

I do not. Tax structuring is for your accountant or tax adviser and should run alongside the agreement, which is drafted to accommodate what they recommend.

Related guidance and services

• Shareholders agreement, £995, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Shareholders agreement for siblings running a family business
• Shareholders agreement for a parent bringing children into the business

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.