The Power of Planning: Why every company needs a shareholders’ agreement

A Bigger Picture: Planning across wealth and generations

At Greenwoods, we encourage clients to view their company interests as part of their wider private wealth planning.  A shareholders’ agreement is not just a legal formality; it is a vital piece of a larger wealth preservation puzzle.  It should be considered alongside other estate and succession planning documents, such as:

• Wills, ensuring your shareholding passes in line with your wishes and there are no conflicts with the provisions of the shareholders’ agreement.
• Lasting Powers of Attorney (LPAs), empowering trusted individuals to manage your business interests if you lose capacity and ensuring this is allowable within the shareholders’ agreement.
• Trusts, which offer flexible structures for succession planning, safeguarding wealth, and managing potential tax exposure.

Why a shareholder agreement matters for your private wealth

From a private wealth perspective, a well-drafted shareholders’ agreement does much more than define relationships between shareholders. It provides a framework for succession terms and is a key part of your broader private wealth plan. When aligned with Wills and any trust arrangements, consistency is key, and proper structuring can help mitigate tax as well as support lifetime planning in the gradual transition of control to the next generation.

Key benefits include:

• Business continuity, minimising disruption during retirement, incapacity, or death.
• Preserving control, preventing shares from being transferred to third parties.
• Fair value, establishing clear rules for valuing and transferring shares.
• Protecting beneficiaries, aligning business succession with estate planning for efficient wealth transfer.

Our approach at Greenwoods is holistic; our Private Wealth team works hand-in-hand with our Corporate & Commercial team, which drafts commercially viable shareholders’ agreements, ensuring company planning coordinates with Wills, LPAs, and trusts. Our specialist tax advisors also ensure arrangements are as efficient as they are effective.

This joined-up approach ensures that your business interests and personal wealth plans are fully integrated, giving you confidence that both your company and your family legacy are protected.

What are the risks of doing nothing?

Without a shareholders’ agreement, businesses and families can be left exposed to:

• Disputes between shareholders and beneficiaries.
• Forced transfers or sales of shares to unwanted parties.
• Uncertainty and instability following incapacity or death.
• Erosion of wealth through unnecessary litigation or tax exposure.

Without thoughtful planning, the business and family dynamics may face unnecessary strain.

Planning ahead is not about expecting failure; it is about creating stability, certainty, and a sense of peace of mind. For company owners who view their business as part of their family’s legacy, a shareholders’ agreement is essential to their estate planning.

If your company forms part of your family’s wealth, don’t leave its future to chance. By coordinating your shareholders’ agreement with your own estate planning, you can secure your company’s legacy for generations to come.

Get in touch with us today to discuss a shareholders’ agreement that works alongside your wider estate plan.