Shareholders agreement with put and call options

A put option lets a shareholder require someone to buy their shares; a call option lets someone require a shareholder to sell. Between them they give shareholders in a private company what the market does not: a buyer at a known price on a known trigger. They are used to give an investor a way out, a founder a way to consolidate control, a lender a way to take shares on default, and a departing shareholder a certain exit. Each needs a trigger, a price, a buyer who can pay, and the articles to make the transfer happen. 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 a guaranteed exit or a guaranteed right to buy, from an investor who wants out after a stated period to co-owners who want each other as the buyer of last resort.

What matters in put and call options

What a put option and a call option each do

A put option is a right, exercisable by the holder, to require the grantor to buy the holder's shares at the option price on the option terms; a call option is a right to require the grantor to sell. A put protects the shareholder who wants to be able to leave (an investor, a minority, a retiring founder); a call protects the shareholder who wants to be able to take control (a founder buying out an investor, a majority buying a minority, the company buying back a leaver's shares). The agreement should say who holds which, over whose shares, and whether the options are mutual or one-way, because a one-way option is a valuable right that should be priced into the deal.

The triggers and the exercise period

Options should be exercisable on stated triggers: a date or anniversary, a shareholder ceasing to be employed, a change of control, a breach, death or incapacity, a deadlock, a failure to pay a capital call, or the non-occurrence of a planned exit by a stated date; the agreement should set an exercise window for each trigger after which the option lapses, the notice that exercises it, and whether exercise is irrevocable, because an option exercisable at any time with no window gives its holder a permanent weapon and the grantor a permanent uncertainty.

The price and how it is fixed

The option price can be fixed at signing, a formula (a multiple of profits or revenue, net assets, the price of the last round), a fair value determined by an independent accountant on a stated basis, or a floor and a cap around a valuation, and the agreement should state the method, the valuation date, who appoints the valuer and bears the cost, whether a minority discount applies, and the position where the parties cannot agree; a put at a price the grantor cannot afford or a call at a price the shareholder regards as confiscatory is a dispute, and the price mechanism should be one both sides tested in the briefing.

Funding the purchase and the company as buyer

The grantor of a put must be able to pay, and the agreement should say how: payment in instalments over a stated period, security for the instalments, a right to find a third-party buyer, or the company as the buyer under a buy-back approved under section 694 of the Companies Act 2006 and funded from distributable profits under section 690, which the company may not have when the put is exercised; a put against a company with no profits is a put against nobody, and the agreement should provide for the shareholders to stand behind it or for the exercise to be deferred.

Options and the articles

An option is a contract, and a shareholder who refuses to transfer under a call cannot be compelled by the agreement alone without litigation, so the articles should contain the option, a power of attorney for a director to execute the transfer, the company's authority to receive the price on trust, and an exemption from pre-emption rights for transfers under it, binding every shareholder under section 33 of the Companies Act 2006; the note on the articles sets out those provisions, and amended articles are quoted separately.

Tax, the accountants' input and the option that is never exercised

The grant and exercise of options over shares have tax consequences for both parties (capital gains tax on the seller, stamp duty on the transfer, and for employee or director shareholders the restricted securities rules in the Income Tax (Earnings and Pensions) Act 2003), which the accountants should advise on before the options are granted, and the agreement should record that advice has been taken; it should also say what happens if an option is never exercised (it lapses, the shares stay where they are, the ordinary transfer provisions apply), and should be reviewed when the triggers it was built around have passed.

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 am an investor and want a way out after five years. Is a put option the answer?

It is the usual one: a put at a stated valuation exercisable in a window after the fifth anniversary, with the grantors able to pay in instalments or find a buyer. Whether the founders can fund it is the question the briefing session answers.

Can the company grant a call option over a founder's shares?

The company can be the buyer under a buy-back approved as the Companies Act requires and funded from distributable profits, or the other shareholders can hold the call. The agreement provides for either, with the articles supporting the transfer.

What if the person who granted a put cannot pay when I exercise it?

The agreement provides for instalments, security, a third-party buyer or deferral, and says which. A put against a buyer with no money is a claim, which is why the funding is drafted before the trigger arrives.

Related guidance and services

• Shareholders agreement, £995, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Shareholders agreement with a right of first refusal
• Shareholders agreement when a shareholder wants to leave

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.