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Put And Call Option Shareholders Agreement Template for England and Wales

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Key Requirements PROMPT example:

Put And Call Option Shareholders Agreement

"Need a Put and Call Option Shareholders Agreement for our UK tech startup with three founding shareholders, where each founder should have the right to sell their shares back to the company after January 2025, and the company should have the right to buy shares if a founder leaves."

Document background
A Put And Call Option Shareholders Agreement is primarily used when shareholders need to establish clear exit mechanisms and ownership transition procedures. Common in private companies and joint ventures under English and Welsh law, it provides certainty for both buyers and sellers by setting out detailed terms for share transfers, including pricing mechanisms, timing, and execution requirements. This agreement is particularly valuable for companies with complex ownership structures or where future ownership changes are anticipated. It combines both put options (right to sell) and call options (right to buy) in a single comprehensive framework, providing flexibility and protection for all parties involved.
Suggested Sections

1. Parties: Identification of all shareholders and the company

2. Background: Context of the agreement and current shareholding structure

3. Definitions and Interpretation: Key terms including Put Option, Call Option, Exercise Price, Exercise Period

4. Grant of Put Option: Terms under which shareholders can sell their shares

5. Grant of Call Option: Terms under which designated parties can purchase shares

6. Exercise Price: Methodology for determining share price and payment terms

7. Exercise Period: Timeframes within which options can be exercised

8. Completion Requirements: Process and requirements for completing the share transfer

9. Warranties and Representations: Standard warranties about share ownership and authority

Optional Sections

1. Tag-Along Rights: Rights of minority shareholders to join in sale

2. Drag-Along Rights: Rights to force minority shareholders to join in sale

3. Non-Compete Provisions: Restrictions on competitive activities

4. Valuation Mechanisms: Detailed procedures for share valuation

Suggested Schedules

1. Schedule 1: Share Capital Table: Current shareholding structure and percentages

2. Schedule 2: Form of Option Notice: Template for exercising options

3. Schedule 3: Deed of Adherence: For new shareholders to be bound by the agreement

4. Schedule 4: Valuation Principles: Agreed methodology for share valuation

5. Schedule 5: Transfer Requirements: Procedural requirements for share transfers

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓƵ | 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, directors' duties, shareholder rights and pre-emption rights

Financial Services and Markets Act 2000: Regulates financial services and markets, including financial promotion restrictions, regulated activities provisions, and investment restrictions

Financial Services Act 2012: Updates to financial regulations and provisions regarding market abuse

FCA Rules and Regulations: Regulatory framework covering regulated activities and market conduct requirements set by the Financial Conduct Authority

Takeover Code: Regulations governing takeovers, particularly relevant if the company is public or subject to the code, including mandatory offer triggers

Income Tax Act 2007: Tax legislation relevant to share transfers and option exercises from an individual tax perspective

Corporation Tax Act 2010: Corporate tax implications related to share transfers and option arrangements

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

Common Law Contract Principles: Fundamental principles of contract formation and enforcement under English common law

Misrepresentation Act 1967: Legislation dealing with false or misleading statements made during contract formation

Unfair Contract Terms Act 1977: Regulations controlling the use and enforcement of unfair terms in contracts

UK Corporate Governance Code: Best practice recommendations for corporate governance, applicable to listed companies

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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