Shareholders agreement for siblings running a family business

Siblings who have taken over a family business usually received equal shares from parents who wanted to be fair, and now contribute unequally to a business that was never divided by contribution. A shareholders' agreement for siblings deals with that plainly: pay for work and dividends for ownership, decisions between the siblings and the parents' remaining role, a route out, and the deadlocks, deaths and divorces that will otherwise be resolved at family occasions. I draft that agreement for all the siblings 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

Brothers and sisters in England and Wales who own a family company together, whether they inherited it, were given it or built it with their parents, and want the terms between them written down before they are needed.

What matters in a siblings' shareholders' agreement

Equal shares and unequal work

The agreement should separate what each sibling receives for working (salary and benefits under a service agreement, set by a policy or an independent view rather than by the siblings themselves) from what each receives for owning (dividends in proportion to shares), so that a sibling who runs the business is paid for running it and a sibling who does not is paid for owning it, and neither has to argue for their share; where the siblings want the ownership to reflect contribution over time, the agreement can provide for that through share classes or a future transfer, with the tax advised on separately.

Decisions between siblings and the parents' continuing role

The agreement should set the reserved matters requiring all or a stated majority of the siblings, how the board is composed and how decisions outside the reserved matters are taken, and what role the parents keep: a shareholding, a seat on the board, a casting vote on deadlock, a consultative role, or none, recorded so that the siblings know when a parent's view is a decision and when it is advice; a parent who has handed over the shares but not the control is a source of conflict the agreement should name.

Pay, dividends and exits

The agreement should set the dividend policy and the pay process, and should provide an exit for a sibling who wants to leave: a right to require the others or the company to buy their shares at a stated valuation over a stated period, funded from profits or borrowing, with the valuation basis (a multiple, an accountant's determination, a discount or not for a minority) agreed now, because the alternative is a sibling who wants out and cannot get out, which is the state in which family businesses fail.

The next generation and in-laws

The agreement should define who may hold shares (the siblings, their descendants, trusts for them; spouses or not), how the next generation is brought in (gifts, employment, vesting), and what happens when a sibling wants to pass shares to a child who does not work in the business or to a spouse; in-laws are the family members the siblings did not choose, and the agreement should say whether they may hold shares, sit on the board or be employed, with the articles supporting the transfer restrictions.

Deadlock between siblings and the family cost of a dispute

Siblings with equal shares can deadlock like any two or four shareholders, and the agreement should provide an escalation (a cooling-off period, a parent or independent adviser, mediation) and a resolution (an independent director with a casting vote on defined matters, or a buy-out mechanism), with the siblings choosing a mechanism they would use; the remedy for unfair prejudice under section 994 of the Companies Act 2006 remains available to a sibling who is excluded, and the agreement's process is designed so that it is never needed.

Death, divorce and keeping the business in the family

On a sibling's death the agreement should provide for the shares to pass to their family or to be bought by the others at the stated valuation, with the family's advisers addressing business property relief under the Inheritance Tax Act 1984 as it now applies; on a sibling's divorce a court can take their shares into account under section 25 of the Matrimonial Causes Act 1973, and the agreement's transfer restrictions, valuation and pre-emption rights keep the shares in the family while value is dealt with; the note on the articles addresses the changes needed for the restrictions to bind 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

I work sixty hours a week in the business and my sister works none. We have equal shares. What does the agreement do?

It pays you for the work through a salary set by a process, and pays both of you for ownership through dividends. If you both want the shares to reflect contribution over time, the agreement can provide for that, with the tax advised on separately.

Our father gave us the shares but still makes the decisions. Can the agreement deal with that?

It records what role your father keeps, in terms: a shareholding, a board seat, a casting vote, or advice. The point is that everyone knows which it is.

My brother wants to leave the business. Does he have to sell to me?

Under the agreement, yes, at the stated valuation over the stated period, with the company or the other siblings buying. Without an agreement he can keep his shares and leave, or sell to whoever the articles allow.

Related guidance and services

• Shareholders agreement, £995, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Shareholders agreement for a family company
• Shareholders agreement with deadlock provisions

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.