What is a deed of adherence?
The basics: When doling out shares in your business, there are a number of considerations. Beyond deciding how to slice and dice 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 template should be used if the new shareholder is a company.
What might a deed of adherence 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 document if you’re negotiating a new shareholders' agreement with an investor. This document assumes that a company already has a shareholders’ agreement in place.
Docue’s deed of adherence template 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.
