Put And Call Agreement Template for England and Wales

A Put And Call Agreement is a sophisticated legal instrument that provides you with both the right to sell shares (put option) and the right to buy shares (call option) at predetermined prices within specified periods. Under England and Wales law, this dual-option structure offers strategic flexibility and clear exit mechanisms for complex corporate arrangements, investment partnerships, and shareholder relationships.

When do you need this document?

You'll need a Put And Call Agreement when entering joint ventures where future ownership changes are anticipated, such as when a strategic investor wants protection against dilution while maintaining growth options. This document is essential for private equity investments where fund managers require structured exit routes, and for family business succession planning where gradual ownership transitions need predetermined pricing mechanisms. The agreement is also crucial when establishing partnerships between companies of different sizes, where the smaller entity may need liquidity options while the larger partner wants expansion opportunities. Additionally, you'll require this agreement in management buyout scenarios where current owners want to retain some control while providing managers with acquisition pathways.

Key legal considerations

Critical elements include precisely defining the strike prices for both put and call options, which may involve complex valuation methodologies or third-party assessments. You must carefully structure the exercise periods and any conditions precedent, such as regulatory approvals or performance milestones that could trigger option rights. The agreement should address potential conflicts between competing option exercises and establish clear priority mechanisms. Consider including drag-along and tag-along provisions that complement the option structure, ensuring minority shareholders receive appropriate protection. Tax implications under UK law require careful consideration, particularly regarding capital gains treatment and any potential stamp duty obligations on share transfers.

Legal requirements in England and Wales

Under the Companies Act 2006, the company must have sufficient authorized share capital and proper board resolutions authorizing the agreement, with directors' duties requiring consideration of the company's best interests. The Financial Services and Markets Act 2000 may apply if the arrangement constitutes a regulated activity, potentially requiring FCA authorization depending on the parties involved and transaction structure. You must comply with the Companies Act 2006 provisions regarding share transfers, including any pre-emption rights in the company's articles of association. The Contract Rights of Third Parties Act 1999 implications should be considered, particularly regarding enforceability by non-signatory shareholders or creditors. For consumer parties, the Consumer Rights Act 2015 may provide additional protections, though this typically applies only in limited circumstances. UK MiFID II regulations may apply to investment firms involved in structuring or advising on the agreement, requiring appropriate client categorization and conduct of business compliance.