Shareholders agreement with a majority and a minority shareholder

A majority shareholder controls the company and a minority shareholder is along for the ride, unless an agreement says otherwise. The law gives the minority a vote that loses, a right to the accounts, and a petition for unfair prejudice when things have gone badly wrong; everything else comes from the agreement, which gives the minority a short list of vetoes, information, a dividend policy and a way out, and gives the majority freedom to run the company and protection against a minority that uses its rights to obstruct. I draft that agreement for both 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

Companies in England and Wales where one person or company holds control and another holds a significant minority, from a founder who has sold a stake to a key employee to a business with an investor at a third, who want the balance written down.

What matters in a majority and minority shareholders' agreement

What the majority can do alone and what the minority can stop

A shareholder with more than half the votes passes ordinary resolutions (appointing and removing directors under section 168 of the Companies Act 2006, approving most transactions), and one with three quarters passes special resolutions (changing the articles under section 21, changing the name, winding up); a minority below a quarter can stop nothing by voting, and one above a quarter can block special resolutions only. The agreement starts from that arithmetic and adds, by contract and by matching articles, the matters the minority may veto, so that the minority's protection does not depend on a percentage it may not hold.

The minority's veto list

The reserved matters should be the decisions that could damage the minority's investment or change the deal it made: issuing shares or options other than under an agreed plan, changing the articles or the rights of the shares, selling the company or its business, borrowing or granting security above a limit, changing the nature of the business, transactions with the majority shareholder or its connected persons, directors' pay above a stated level, and winding up; the list should protect the minority on those matters and leave the majority to run the company, because a minority with a veto over hiring is a partner in management rather than an investor.

Information and the board

Management accounts at stated intervals, the annual budget, the statutory accounts and notice of material events should all reach the minority, under confidentiality, and the agreement should settle whether the minority sits on the board (taking on a director's duties under the Companies Act 2006), attends as an observer, or does neither; a minority director's removal by the majority under section 168 is a matter for the articles, where a weighted voting provision on that resolution can protect the seat, and the note on the articles addresses it.

Dividends and the minority's return

A majority that takes its return through salary, benefits and transactions with its own companies leaves the minority with nothing, and the agreement should set a dividend policy (a stated proportion of distributable profits after retaining what the business needs, decided by the board within the policy), require directors' remuneration to be set by a stated process and disclosed, and make transactions with the majority's connected persons reserved matters; the distribution rules in section 830 of the Companies Act 2006 limit dividends to profits available, and the policy works within them.

Tag-along, pre-emption and the minority's exit

Tag-along, so that a buyer of the majority's shares must offer for the minority's on identical terms; pre-emption on transfers, so that the minority sees the majority's shares before any outsider does; and, if the parties will agree it, a put option letting the minority require the majority or the company to buy at a stated valuation after a stated period or on stated events: these go in the agreement with matching articles; without an exit the minority's shares are worth what the majority chooses to pay, and the agreement should say so to both sides.

The majority's protections against a difficult minority

The agreement should give the majority drag-along so that a sale at or above a minimum price takes the minority with it, a right of first refusal on the minority's shares, compulsory transfer provisions if the minority breaches the agreement or competes, and a statement that the minority's vetoes are to be exercised reasonably and promptly, with a deadlock mechanism where a veto is used to obstruct; the minority's statutory remedy for unfair prejudice under section 994 of the Companies Act 2006 remains available, and a well-drafted agreement makes it unnecessary by giving the minority what a court would otherwise have to.

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 hold thirty per cent. What can I stop without an agreement?

Nothing by voting: ordinary resolutions pass without you and you cannot block special resolutions below a quarter. The agreement gives you vetoes over the matters that matter and information rights, which is where a minority's protection comes from.

As the majority, why would I give the minority vetoes?

Because the minority's money or contribution was the price of the deal, and because a minority without protection has only the unfair prejudice petition, which is worse for both of you. The agreement confines the vetoes to the matters that could damage the minority and leaves you to run the company.

Can the majority remove the minority's director?

By ordinary resolution under the Companies Act, unless the articles contain weighted voting on that resolution. The note on the articles addresses whether yours should.

Related guidance and services

• Shareholders agreement, £995, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Shareholders agreement for a minority shareholder's protection
• Shareholders agreement with a passive investor

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.