Put And Call Option Shareholders Agreement for the United Kingdom

Put And Call Option Shareholders Agreement Template for England and Wales

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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."

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What is a Put And Call Option Shareholders Agreement?

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.

What sections should be included in a Put And Call Option Shareholders Agreement?

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

What sections are optional to include in a Put And Call Option Shareholders Agreement?

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

What schedules should be included in a Put And Call Option Shareholders Agreement?

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) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author