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Call Option Shareholders Agreement Template for England and Wales

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Key Requirements PROMPT example:

Call Option Shareholders Agreement

"I need a Call Option Shareholders Agreement for our tech startup where three founding members will have the right to purchase additional shares at a predetermined price of £50 per share during January 2025, with tag-along rights for minority shareholders."

Document background
A Call Option Shareholders Agreement is commonly used when parties wish to establish future ownership rights while deferring actual share transfers. Under English and Welsh law, this document provides a framework for potential share acquisitions, typically used in business succession planning, employee incentivization, or strategic investment scenarios. The agreement details the option terms, exercise procedures, and rights of all parties involved, while ensuring compliance with UK company law and corporate governance requirements.
Suggested Sections

1. Parties: Identification and details of all parties to the agreement including the option holder and the shareholders granting the option

2. Background: Context of the agreement, including company details and reason for granting the call option

3. Definitions: Definitions of key terms used throughout the agreement including 'Option Shares', 'Exercise Price', 'Exercise Period'

4. Grant of Option: Terms and conditions of the call option, including number of shares subject to the option

5. Exercise Period: Specification of the time period during which the option can be exercised and any conditions precedent

6. Exercise Price: Details of the price at which shares can be purchased and payment terms

7. Exercise Procedure: Step-by-step process for exercising the option, including notice requirements

8. Completion of Share Transfer: Process and obligations for completing the share transfer upon exercise

9. Representations and Warranties: Standard representations and warranties from all parties

10. Termination: Circumstances under which the option agreement can be terminated

11. Governing Law and Jurisdiction: Specification of English and Welsh law as governing law and jurisdiction

Optional Sections

1. Tag-Along Rights: Rights of other shareholders to join in the sale when the option is exercised

2. Drag-Along Rights: Rights to force other shareholders to join in the sale upon option exercise

3. Anti-dilution Provisions: Protections against dilution of the option holder's rights through new share issues

4. Change of Control Provisions: Special provisions triggered by a change in control of the company

5. Restrictive Covenants: Non-compete and other restrictive covenants applicable to the parties

Suggested Schedules

1. Schedule 1 - Share Details: Detailed description of the shares subject to the option, including class and rights

2. Schedule 2 - Form of Exercise Notice: Template notice to be used when exercising the option

3. Schedule 3 - Deed of Adherence: Form of deed for new shareholders to adhere to existing shareholders' agreement

4. Schedule 4 - Valuation Methodology: Agreed method for determining share value if not fixed

5. Schedule 5 - Existing Shareholders' Agreement: Copy of the current shareholders' agreement to which option holder will become party

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions





























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Industries

Companies Act 2006: Primary legislation governing company operations, including share capital provisions, transfer mechanisms, directors' duties, shareholder rights and obligations, and pre-emption rights

Financial Services and Markets Act 2000: Regulatory framework covering financial promotion restrictions, regulated activities provisions, and market abuse regulations

Insolvency Act 1986: Legislation governing share transfers in insolvency situations and protection of creditors' interests

UK Corporate Governance Code: Guidelines establishing best practices for listed companies and transparency requirements

The City Code on Takeovers and Mergers: Regulations governing takeover situations and relevant provisions for public companies

Income Tax Act 2007: Tax legislation affecting share transfers and option arrangements from an income tax perspective

Corporation Tax Act 2010: Corporate tax implications for share options and transfers between corporate entities

Taxation of Chargeable Gains Act 1992: Legislation governing capital gains tax implications of share transfers and options

FCA Handbook: Regulatory requirements from the Financial Conduct Authority applicable to regulated entities and transactions

Companies House Requirements: Statutory filing and registration requirements for share transfers, charges, and company documentation

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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