Shareholders agreement for a property development company

A property development company has investors who put in the equity, a developer who runs the project and expects a share of the profit for doing so, and a lender whose finance pays for the build and whose consent governs most decisions. The agreement has to record the project everyone signed up to, the funding and the guarantees, the developer's authority and reward, the decisions that need the investors, the order in which the sale proceeds come out, and what happens if the build overruns, the market turns or an investor needs to leave before the end. I draft that agreement for the investors and the developer 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

Investors and developers in England and Wales using a company to develop a site, a building or a scheme, from a single refurbishment to a multi-unit scheme, who want the money and the control agreed before the first invoice.

What matters in a property development shareholders' agreement

The site, the project and the appraisal everyone signed up to

The agreement should record the site, the planning position, the scheme, the development appraisal (costs, programme, sales values, the target profit) and the business plan the shareholders approved, so that departures from it are measurable and the reserved matters bite; the company's purpose should be confined to the project, with any further project a reserved matter, and the agreement should say what the company has already committed to (the site purchase, the professional team, the planning strategy) and on whose authority.

Funding, the development finance and the shareholders' guarantees

The agreement should set the equity each investor contributes (shares, shareholder loans or both, with the loan terms stated), the development finance the company has taken or will take, the lender's requirements (cost overrun guarantees, interest shortfall guarantees, personal guarantees from the developer or the investors), the contribution and indemnity arrangements between the shareholders for guarantee payments, and the obligation to fund cost overruns (a stated commitment, a priority return on overrun funding, or dilution of a shareholder who does not contribute); the lender's security over the site and the shares is registered under section 859A of the Companies Act 2006, and the agreement sits below it.

The developer's role, fees and promote

The developer runs the project under a development management agreement the shareholders approve, and the agreement should record the developer's authority within the approved appraisal and programme, its fees and when they are paid, its promote (a share of profits above a stated return to the investors) in the waterfall, its reporting, and its removal for stated defaults (cost or programme overruns beyond a tolerance, breach, insolvency) with the project continued by a replacement; a developer paid a fee during the build and a promote at the end has the right incentives only if the promote depends on the investors being paid first.

Decisions, cost overruns and the lender's consents

The agreement should set the reserved matters for the investors (changes to the scheme, the appraisal or the programme beyond a tolerance, the building contract and material variations, the sales strategy and reservations below a stated price, further borrowing, the developer's fees, distributions outside the waterfall), the thresholds by investment, the information investors receive (monthly cost reports, valuations, sales progress), and the lender's consent rights that override the shareholders' decisions; a cost overrun is the commonest event, and the agreement should say who funds it and on what terms before it happens.

Sales, the waterfall and the profit share

The agreement should state the waterfall for proceeds from sales or refinancing: the development finance repaid first, then costs and reserves, then shareholder loans with interest, then the investors' equity with any preferred return, then profits shared in the stated ratio with the developer's promote, with distributions within section 830 of the Companies Act 2006 and the accountants confirming the figures; it should also say how unsold units are dealt with at the end (retained and let, sold at a reduced price by a stated date, or distributed in specie), because a project is not finished until the last unit is sold or allocated.

What happens if the project stalls or an investor wants out

The agreement should address planning refusal, a construction dispute, a market fall or a lender's enforcement: the shareholders' options (further funding, a sale of the site, mothballing, a solvent winding up), the directors' duties under the Insolvency Act 1986 when the company cannot meet its liabilities, and the shareholders' guarantees that would be called; and it should provide for an investor who needs to leave before the end (pre-emption, a valuation reflecting the project's stage, no obligation on the others to buy, and the lender's consent), with the note on the articles addressing the share classes and 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

The developer wants twenty per cent of the profit. Is that documented in the shareholders' agreement?

In the waterfall, as a promote payable after the investors have received their stated return, with the developer's fees in a separate management agreement. The agreement states the order in which every pound of proceeds comes out.

Who pays if the build overruns?

What the agreement says: the shareholders in proportion, the developer within a tolerance, or overrun funding with a priority return and dilution for those who do not contribute. The lender will also have required an overrun guarantee from someone, and the agreement records whose.

Can an investor get out before the units are sold?

Only if someone will buy their shares, and the agreement provides pre-emption and a valuation reflecting the project's stage without obliging the others to buy. The lender's consent is usually needed as well.

Related guidance and services

• Shareholders agreement, £995, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Shareholders agreement for a special purpose vehicle
• Shareholders agreement for a company with a lender

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.