What is a deed of adherence to shareholders agreement?
The basics: When issuing shares in your business, there are a number of considerations. Beyond deciding how to distribute equity, you’ll also need to consider the kind of documentation required when issuing shares.
When to use: Often, the issuing of new shares will require a “deed of adherence”, which essentially confirms that a shareholder agrees to abide by the terms of an existing shareholders’ agreement. This particular deed of adherence to shareholders agreement template should be used if the new shareholder is a company. If the shareholder is an individual, this deed of adherence for individual shareholders should be used instead.
What might a deed of adherence to shareholders agreement include and when would it be triggered?
Content: A company's articles of association or shareholders' agreement usually stipulates that a company cannot issue or register the transfer shares to a new shareholder unless that new shareholder has signed a 'Deed of Adherence', under which they agree to become bound by the terms of a shareholders' agreement as if they were originally a party to it. This is necessary so that the company and the shareholders can enforce the terms of the shareholders’ agreement against each other in the event of a breach of its terms.
This ensures that a new shareholder can enforce the terms of the relevant shareholders' agreement against the company and existing shareholders and vice versa.
Assumption: It’s worth noting, you would not use this deed of adherence to shareholders agreement if you’re negotiating a new shareholders' agreement with an investor. This document assumes that a company already has a shareholders’ agreement in place.
Why use Docue’s deed of adherence to shareholders agreement template for company shareholders?
Legal protection - by using this deed of adherence to shareholders agreement for company shareholders, the parties will get peace of mind that they are effectively binding the new shareholder to the original shareholders’ agreement, leaving no room for error.
Clear understanding - this deed of adherence to shareholders agreement provides clarity on the obligations and rights of the new shareholder, ensuring that the new shareholder understands its role and responsibilities as if it was an original party to the shareholders’ agreement.
Time and cost-efficient - thanks to Docue’s ultra-modern automated contract creation technology, all you need to do is enter the parties’ details and the details of the original contract, and Docue will automatically generate a legally binding deed of adherence to shareholders agreement that is tailored to your specific requirements. The template is fully customisable, so you can modify any of the clauses to suit your needs.
Docue’s deed of adherence to shareholders agreement adapts to your needs
Dynamic template: In order to create your deed of adherence with confidence and speed, simply click through the intelligent tick box options and text box answers and you’ll have a comprehensive, tailored, and ready-to-use deed of adherence in no time.
Lawyer-made content: This template is drafted and maintained by experienced business lawyers.
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