Many shareholders of a company enter into a shareholders’ agreement with each other as to how they will behave in respect of their company. However, the agreement is widely disregarded by many businesses as it is not a legal requirement. Some shareholders believe that nothing will go wrong in the future. Many shareholders consider an agreement unnecessary, as they could rely on their close friendship with other shareholders, to solve problems. Some shareholders also feel that if the provisions in an agreement, could also be included in the company’s articles of association, then why the need for a shareholders’ agreement? This article will explore what a shareholders’ agreement is and whether or not it is needed.
What is a Shareholders’ Agreement?
A shareholders’ agreement is a private contract between the shareholders of a company that creates legally binding obligations between shareholders. The agreement provides clarity on important matters that affect shareholders, such as their duties, and how disputes are to be resolved, for example. A shareholder does not have to enter into an agreement. If a shareholder enters into an agreement he must do so without compulsion. Agreements are not regulated by the Companies Act 2006, so there is no legal process under the CA 2006, to alter the agreement. Therefore, most shareholders’ agreements will normally state that all shareholders, who are a party to the contract, must give consent to amend it.
Do I Need a Shareholders’ Agreement?
Friendships with other shareholders could deteriorate without a well drafted agreement, resulting in expensive litigation. A minority shareholder can have more control in the running of a business, under an agreement, as all parties to the contract, must agree to an amendment. A shareholders’ agreement can include a shareholder’s personal rights which are contractually enforceable, for example, the right for a specified person to be appointed as a director. By contrast, if this right was included in the company’s articles, it would not be contractually enforceable under section 33 CA 2006. An agreement also allows for commercially sensitive information to be included, as it is a private document. The impact of Covid-19 has necessitated the need for a shareholders’ agreement. The pandemic has initiated changing circumstances for business owners, such as cash flow problems, a desperate need for investment, shareholders becoming incapacitated due to Covid-19. A shareholders’ agreement is essential as it can be tailored to suit the needs of the business and cover a myriad of situations.
A shareholders’ agreement is a crucial document that legally binds all parties and can avoid potential conflict between shareholders, especially as the company’s articles of association, do not provide adequate protection. Obtaining a bespoke shareholders’ agreement from MLS will ensure the effortless running of the business and provide it with the best chance to flourish financially. It is imperative that every company has a shareholders’ agreement, or an updated agreement, that grows in harmony with the business, and takes the impact of Covid-19 into account.
This article is for informational purposes only and does not constitute legal advice. Contact us today on 02144 478 730 to book your free, no obligation, consultation.
Author: Niresh NaidooRead More
New Safety Rules for Residential Landlords – April 2021 – What does it mean for Tenants and Landlords? (by Jessie Smith)
The new Electrical Safety Standards in Private Rented Sector (England) Regulations 2020 came into force on the 1st April 2021 and require private sector landlords to monitor the safety of the electrical systems in their properties as well as making any necessary inspections and improvements.
What are the duties of Landlords under the New Safety Rules?
- Electrical instillations to be inspected and tested at least every five years followed by a copy of the safety report to go to the tenant within 28 days.
- Ensure that national standards for electrical safety are met.
- A safety report should also be given to a new tenant before they move in.
- A copy of the report must be sent to any local authority within 7 days of request.
- Complete any remedial or further investigative work shown by the report within 28 days or less if specified by the inspector.
What are the affected properties?
- Regulations apply to all private tenants who pay rent and occupy the property. They also apply to properties which are occupied by multiple parties who share facilities.
Who will enforce the Regulations?
- Local Authorities can enforce the new safety rules if they have reasonable grounds to believe that a landlord is in breach of the rules.
- If this is the case, the Local Authority will serve the landlord with a remedial notice and if this is not complied with the authority can step in to arrange a completion of the necessary work and then they will recover the cost from the landlord.
- Local Authorities also have the power to impose a penalty on the landlord for the breach of regulations ( with a notice of intent ) which the landlord has the right to appeal within 28 days of the notice.
Who can carry out the Inspections?
Inspections must be carried out be a qualified professional. Landlords can choose an inspector who is a member of the Competent Person scheme established by the electrical safety industry however the landlord can also choose a non-member and have them sign a checklist to verify their qualifications. Fixed electrical parts of the property such as wiring, and sockets must be inspected although the new rules do not apply to appliances such as refrigerators or cookers, but these still should be regularly checked.
Issues an inspector would be looking for include:
- Fire hazards
- Electrical shock risks
- Defective electrical work
Here an MLS we are regularly instructed by landlords to advise on compliance and possession claims. If you have any questions please contact us on 01244 478 730 , we will be happy to help.
This article is for information purposes only and does not constitute legal advice. Please contact us for advice.
I am often asked about my accent… It used to make me feel uncomfortable and to be honest, I was quite sensitive about it. In a world where the spoken word is one’s biggest tool, operating in a second language can be tricky (and mistakes can knock one’s confidence). I came to the UK when I was 19 and with zero understanding of English. I worked hard and a year later I was accepted to read law at the University of Wales, Bangor. I loved studying law and within a few months I knew that the law and me were a perfect match, I just knew I could be good at it.
I can draw on a good example of what law with a foreign accent means to me.
While at Bangor university, I had the idea of setting up the university’s very first Law Society. I was so excited. I spoke to my friend about it and we both looked into the procedure, got the green light from the Head of School and started to take steps towards creating the university’s first Law Society. To my horror, I realised that there were many public speeches required for this idea to properly take off. Although I knew exactly what needed to be said and felt very passionate about this project, I was unusually scared to open my mouth and doubts started to invade my mind. I mean, could an international student really set up a university’s law society? I had doubts about whether it could ever work. Chatting to my friends and lecturers was one thing, but standing in front of twenty presidents of other societies at board meetings was quite another. I didn’t feel ready because I thought nobody would actually listen to what I had to say with an accent like mine!
I surprised myself by how differently I looked at things in the UK. I never had any problems with public speaking in my native Poland but in the UK, things were different. Challenges looked greater and others looked at me differently. On that occasion the self-doubt in me won and to cut a long story short, my friend and I agreed that my friend would take up the presidency. She undertook all the public speaking roles and in turn received the plaudits and praise while I quietly worked in the background as the visionary and Secretary Treasurer. My friend did a splendid job and she never really learnt why it was that I was so eager for her to take up the reins; I was just too embarrassed to tell her.
This example of law with a foreign accent was the first of many examples in my life where I allowed my ‘accent issue’ to hinder my development and my desire to become a successful lawyer. Somewhere along the line, I convinced myself that my English was simply not good enough and that a professional career in law was not for people with an accent like mine. The strange thing was that my grades said otherwise. I never failed a single exam and I never had to re-sit anything. I obtained a strong 2.1 in law, passed my LPC diploma with commendation and was lucky enough to secure my first choice of training contract. The story of my journey even made it into a radio program and several newspapers.
Despite this success, I still felt my English was not good enough and so I insisted on spending countless hours of my life totally beating myself up for making tiny grammatical errors when speaking to my colleagues, clients or the court. I used to pour over what I had wrote in excruciating detail because of my insecurity.
I vividly remember prosecuting a benefit fraud in the Magistrates’ Court when a defendant out of nowhere stood up and said to everyone in Court that I was clearly foreign, could they not afford someone proper to prosecute him and that he didn’t understand what I’d just said. I felt embarrassed, but I collected myself and calmly asked whether I should repeat anything, but he just smirked, said “naa” and sat down laughing. He had no problem understanding me before or after his remark and although I knew he was simply trying to distract me, deep down he struck a chord and I could not stop my heart from sinking. I kept asking myself: what am I even doing here? Did I really think I could do this job in a second language? Am I ridiculous? Will my boss find out about this and fire me? Will they all laugh at my career choice when I leave the court room?
When I arrived back at the office (after a successful end to the case) the court’s legal advisor had already telephoned my supervising partner and apologised for the defendant’s behaviour and told him that my English was better than most solicitors he came across and that there was absolutely no problem or reason to doubt myself. I immediately gave up on thinking that I had hidden my embarrassment and although I appreciated his efforts and kind gesture, of course, I did not believe a word he said. Instead, I kept beating myself up about it for weeks and weeks, if not months and months. It damaged my confidence and knocked my self-esteem. I always wanted to be a lawyer, but I never felt more different from other native-speaking lawyers than after that incident. Afterall, I’d never even met or heard of any other practising solicitor who learned English as an adult and decided to pursue carrier in law.
After this incident, I became even more sensitive about my accent and I avoided at all costs drawing anymore attention to it than I needed to when opening my mouth and I kept my insecurity, buried, for years, working and partying with my English lawyer friends and trying to pretend that I wasn’t different at all.
I don’t think anyone likes to be ‘different’, I certainly didn’t. I did not like being asked about my accent or where I was from ‘originally’ or the best one, which I still get asked, whether ‘I like it here’. I’m still not a fan of these questions although I now know that people are simply curious and don’t mean any harm by asking.
It eventually became clear to me that my good grades, training contract offers, praising family members, radio interviews, great client reviews and diplomas could not and did not help me to realise my own worth. I was barking up the wrong tree.
Slowly and through nothing more than self-education and coaching, I realised that my accent wasn’t to blame and that being different did not make me a lesser lawyer.
I also realised that my ‘issues’ were absolutely normal. I mean, I moved to a foreign country as a young adult without knowing any language whatsoever and I decided to become (out of all possible jobs in the world) a solicitor. Still, despite all the high odds, I followed my dream. I wanted to be a lawyer since I was 5 years old and I didn’t care about language in which I did it. It was the only job I ever saw myself doing. Following through with such a decision was a huge step out of my comfort zone and I can only guess that my confidence was lost somewhere along this very, very bumpy road.
A few years after the ‘Magistrates’ Court’ incident, a client of mine came to my office. She was a teacher in one of the local primary schools. She told me that she had displayed one of the newspaper articles in which I was featured on her classroom wall because there were many foreign children in her class, some of whom were concerned about their prospects of success in a foreign country and she wanted to encourage them to realise that if they really wanted to succeed, they could. If they wanted to be a lawyer, they could. It did not matter what their background was or if they struggled with the language. “Look at this woman, she couldn’t speak English until she was 19 and she is now a fully qualified solicitor.” I sat there listening to her. If she only knew how terribly critical I was of myself for many years.
This discussion that day with my teacher client did start to bring about a change in my way of thinking. ‘The penny had dropped’. From then on, I decided to seriously start recognising my own worth, pat myself on my back from time to time, look at the bigger picture and finally stop fixating on minor imperfections that no-one cares about.
Some people say that being different can be either a curse or a blessing. My personal experience, in law in/with a foreign accent, is that it’s a bit of both. Of course, I do not know all the answers but what I do know for sure is that the power to tip the scale is with the affected individual. Looking back, it is clear to me that I didn’t feel good enough. It was not about the accent at all! It was just a mask that I decided to hide behind for a very, very long time.
Nowadays, I don’t beat myself up anymore and the fear of other’s judgement has surprisingly disappeared once I stopped judging myself. I have even taken another huge leap of faith and set up my own law firm.
Has my accent gone? Hell, no! But I kind of like it now and I definitively believe that being different makes me a rather good lawyer. A lawyer with a wider perspective and understanding of life. A more adaptable lawyer. A lawyer who can express herself in two languages and who has the understanding of culture and behaviour from two separate countries. Perhaps I don’t fit within the usual “wordsmith stereotype” but I am great at analysing cases, seeing all sides of a case, recalling the relevant law, building strategies, advising my clients and getting the job done.
Sure, I am not everyone’s cup of tea, but I wouldn’t want to work with everyone either.
What I would like to see is much more diversity in our legal sector. I craved it a lot when I was trying to make it as a young trainee and then as a young lawyer. The truth is, we need diversity to create and uphold watertight laws! We need lawyers from all sort of different backgrounds and with all sorts of different accents, experiences and stories. Our legal system needs to reflect the actual world we live in, so please do not give up on your dreams just because of fear. I am here for you if you want to talk. I know how hard you’ve worked for this and I also know that you and your wonderful accent have the potential to make the legal sector a better place!