Disclaimer: This article from Atom Content Marketing is only a general guideline for UK businesses subject to English laws. Atom Content Marketing, expert collaborators and ICAEW (as distributor) disclaim any liability for any errors or omissions. The articles of association constitute a legal contract between the partners and the company. Articles tend to retain every member of the company, although there is no individual contract between members. In the case of a private company, the clauses relating to the shareholders` agreement should be mentioned in the articles of association. This condition is particularly important in cases of restrictions on the portability of partners` shares. Legal Alert is a monthly checklist from Atom Content Marketing that highlights laws, regulations, codes of conduct, and decisions that could affect your business. 7. Circumstances of majority protection may arise when a shareholder who holds the majority of the shares of a company wishes to sell his shares to a third-party buyer, but a minority shareholder does not wish to sell his shares in the same way, the third-party buyer withdraws from the transaction since he is not able to acquire 100% of the company. This can be avoided by adding “towing” provisions in a shareholders` agreement that provide that, if the owner of a certain percentage of the company`s shares wishes to sell his shares to a third party, that majority shareholder may compel the minority shareholders to sell their shares to third parties.  www.stephensons.co.uk/cms/document/Shareholders_agreements.pdf There is no specific legal act governing the shareholders` agreement and, moreover, there is no uniform case law governing the agreement. There is no legal formality for its creation. However, it is partly inspired by the contractual act and other legal principles.
The agreement cannot be applied to one third of the SHA. However, to enforce the agreement against the third party in the non-company case, it must first be included in the company`s articles of association. The articles of a company are of a public nature, that is, they are easily accessible to the third party and would therefore be legally required to read the articles before concluding a transaction. Introduction Facts Supreme Court decision CommentAry Introduction A recent Supreme Court case sheds light on whether a provision of a shareholders` agreement with legal effect may derogate from the rights set out in the Actions Act. Beyond the concrete facts, it offers a general method for predicting whether a provision in a shareholder`s contract should have legal effect. It is not uncommon for a shareholders` agreement to contronne conditions that go directly with regard to a general rule of the law. This is essentially the reason why such agreements are concluded – that is, to establish the balance of power in a way that corresponds better to the parties than those established by law. This can be done by imposing a unanimous decision on certain issues that would otherwise normally be sufficient for a majority decision, or by imposing conditions on a party`s right to transfer shares that go beyond the options provided by law. Nevertheless, it is generally accepted that only the parties, and not the company, are bound by the shareholders` agreement, even if all the shareholders are parties to it. It is often said that the relationship between the parties is governed by civil law, while the relationship between the parties and the company is governed by company law.