Shareholders agreement with a right of first refusal

A right of first refusal lets a shareholder match an offer another shareholder has received from an outsider, so that the shares go to the insider at the outsider's price rather than to the outsider. It is simpler than a full pre-emption round, suits companies where one shareholder wants the first chance to buy the others out, and depends on details: whose offer counts, what matching means, how long the holder has, and what the seller may do if the right is not taken up. Like every transfer restriction, it needs the articles as well as the agreement. I draft the agreement, 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

Shareholders in England and Wales who want the first chance to buy another shareholder's shares at the price an outsider has offered, from a majority holder consolidating control to co-founders who want each other as the only alternative to a stranger.

What matters in a right of first refusal

The difference between a right of first refusal and pre-emption

Pre-emption on transfer requires a seller to offer shares to the other shareholders at a stated or valued price before seeking an outsider; a right of first refusal lets the seller find an outsider first and then requires them to offer the shares to the holder of the right at the outsider's price and terms, with the holder able to match or decline. The right of first refusal uses the market to set the price and suits companies where a valuation mechanism would be contested; pre-emption suits companies where outsiders should never see the shares. The agreement should choose one, or combine them deliberately, rather than contain both by accident.

Who holds the right and over whose shares

The right can be mutual (every shareholder has it over every other's shares, in proportion), held by one shareholder over the others' shares (a founder or majority holder), or held by the company; the agreement should say who holds it, over which shares, how the right is shared where several holders want to exercise it, and whether it applies to all transfers or only to transfers of a stated size or to a non-shareholder, with permitted transfers (family, trusts, group companies) excluded on stated conditions; a one-way right in favour of the majority is a term the minority should understand and price.

Matching the third-party offer and the terms that count

The holder matches by agreeing to buy on the same price and material terms as the outsider's offer, and the agreement should define the terms that count (price, form of consideration, timing, warranties) and what happens where the outsider's offer includes terms the holder cannot match (shares in the outsider, a job for the seller, a package deal with other assets), usually by valuing the non-cash elements or treating the offer as not capable of being matched; an outsider's offer structured to be unmatchable is the device the drafting addresses.

The period, the notice and the evidence of the offer

The seller serves notice of the outsider's offer with its full terms and evidence that it is bona fide (a signed offer letter, proof of funds), the holder has a stated period to exercise the right by written notice, and completion follows within a stated period; the agreement should say that the offer must be from a bona fide third party at arm's length, not a connected person of the seller, that the seller may not accept a lower or different offer afterwards without a fresh notice, and that the holder's exercise is binding.

The sale that proceeds if the right is not exercised

Where the holder declines or the period expires, the seller may complete the sale to the outsider on the terms notified, within a stated period, with the outsider signing a deed of adherence and the directors required to register the transfer; the agreement should say that any change in the terms (a lower price, a longer timetable) requires a new notice, and should address how the right interacts with drag-along and tag-along (transfers under those rights are exempt, or the right applies first).

The articles and the transfer that ignores the right

A transfer in breach of a right of first refusal in the agreement is a breach of contract but may still be registered, so the articles should contain the right as a restriction on transfer that lets the directors refuse to register a non-compliant transfer, binding every shareholder under section 33 of the Companies Act 2006, and the agreement should provide for a deemed transfer notice at the outsider's price in favour of the holder where a shareholder attempts to transfer in breach; the note on the articles sets out the provisions needed, and amended articles are quoted separately.

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

Should we use a right of first refusal or pre-emption?

A right of first refusal where the market should set the price and a shareholder wants the chance to match; pre-emption where outsiders should not be involved at all. Some agreements combine them with pre-emption first; the briefing session is where it is decided.

The buyer's offer includes a consultancy for the seller. Can I match that?

The agreement defines the terms that count and how non-cash elements are treated, usually by valuing them or treating the offer as not matchable. An offer structured to be unmatchable is what the drafting addresses.

My co-shareholder sold to an outsider without giving me the chance. What now?

If the articles contain the right, the transfer should not have been registered and can be challenged; if only the agreement does, you have a claim for breach. The agreement and the articles together are what prevent it happening.

Related guidance and services

• Shareholders agreement, £995, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Shareholders agreement with pre-emption rights on share transfers

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.