When setting up or growing a company with more than one shareholder, it’s easy to get caught up in day-to-day operations and push the legal paperwork to the back burner. But failing to have a proper shareholder agreement in place can be one of the most expensive mistakes a business makes – especially when things don’t go to plan.

This article explains what a shareholder agreement is, why it matters, the key clauses it should contain, and how share transfers work in practice.

A shareholder agreement is a private, legally binding contract between a company’s shareholders. It sets out:

Unlike the company’s articles of association, a shareholder agreement is not publicly filed and can be customised to reflect the specific intentions of the shareholders. It provides clarity, certainty and a shared understanding of rights and responsibilities – especially during periods of conflict, growth or change.

Without a clear legal framework, disagreements can quickly lead to deadlock or litigation. A shareholder agreement helps prevent disputes by setting out the rules in advance.

Disputes often arise when there is a lack of formal structure or clear rules. Typical flashpoints include:

Without a written agreement, resolving these issues can lead to deadlock, costly litigation, or even the failure of the business.

Every business is different, but most shareholder agreements follow a similar structure. A typical shareholders agreement format includes:

This structure provides a clear, consistent framework for shareholders and reduces ambiguity.

A robust agreement should be tailored to the business, but commonly includes:

Rules around selling or transferring shares, including pre-emption rights, drag-along and tag-along provisions.

A list of reserved matters that require unanimous or majority consent — protecting shareholders from unilateral decisions.

How profits will be distributed or reinvested.

What happens on retirement, death, or when a shareholder wants to sell.

Clear processes for resolving disagreements, such as mediation, arbitration or buy-out mechanisms.

Provisions preventing shareholders from competing with the business after they leave.

Setting these rules in advance helps avoid confusion, tension, and costly disputes later.

Transferring shares is not always as simple as selling or gifting them. Depending on your company’s articles and shareholder agreement, transfers may require:

Having a defined process protects minority shareholders, prevents unsuitable buyers from entering the business, and ensures legal compliance.

A shareholder agreement is not a “set and forget” document. As the business grows, brings in investment or changes direction, the agreement should be reviewed and updated to reflect new realities.

Thinking about drafting or updating a shareholder agreement? Don’t wait until a disagreement arises. Our Corporate Services team can help you put robust protections in place now — saving time, money, and relationships later.

If you’re considering selling your business, our expert Corporate Services team can guide you through each stage of the process with clarity and confidence.

Visit our Business Services or Business Contracts pages, or contact us to discuss your plans.

Selling a business is often the result of years of work, planning and perseverance. But when the time comes to sell, the biggest challenge is rarely finding a buyer – it’s navigating the legal and commercial steps that make a sale successful.Whether you’re planning a full exit or transitioning to a new venture, preparing for a sale involves far more than finding a buyer and agreeing a price.

Here’s what you need to know when you’re planning to sell a business in the UK.

There are two common ways to structure a business sale:

You sell selected assets such as stock, equipment, contracts or goodwill. Buyers can choose what they take on, making this attractive to purchasers, but it may trigger third-party consents or require new contracts.

You sell your shares in the company, transferring ownership entirely. The buyer acquires the company “as is,” including liabilities and obligations. This can be quicker and more efficient for the seller, but may present more risk for buyers.

The right structure for selling a company depends on your tax position, risk profile, liabilities, and the buyer’s commercial objectives.

Clear, well-organised paperwork strengthens your position and builds buyer confidence. Preparation can also reduce delays and reduce the risk of buyers renegotiating the price.

Key documents include:

Preparing early also supports a smooth due diligence audit, which buyers will expect.

When a buyer considers purchasing your business, they will want to understand exactly what they are acquiring. Expect a thorough review of:

This process can feel demanding, but addressing potential concerns in advance often avoids delays or price reductions. Your solicitor can help you prepare and respond confidently to buyer queries.

If your business owns valuable IP or confidential information, ensuring these are properly documented is essential. 

How the final purchase price is determined can have a significant financial impact.

The price is adjusted after completion based on the actual financial position at the time of sale. This offers flexibility but can lead to post-completion discussions if figures differ from expectations.

The price is fixed based on a historic balance sheet. The seller guarantees that no value has been taken from the business since that date. This approach gives greater certainty and often accelerates negotiations.

The best approach depends on the complexity of the business and the deal dynamics.

A well-structured sale is always supported by the right advisers. Key members of your deal team may include:

With the right team in place, you can focus on the future while professionals guide you through the sale process.

Considering selling your business? Speak to our expert Corporate Services team to start the journey with clarity and confidence.

If you’re considering selling your business, our expert Corporate Services team can guide you through each stage of the process with clarity and confidence.

Visit our Business Services or Business Contracts pages, or contact us to discuss your plans.

Whether you’re pitching to an investor or working with a new supplier, the biggest risk is often the information you reveal – not the deal itself. Confidentiality agreements and NDAs help manage that risk. NDAs are widely used across UK businesses to ensure sensitive information is protected during commercial discussions.

An NDA (Non-Disclosure Agreement) is a legally binding contract that prevents someone from sharing or misusing confidential information. It sets clear rules on what can be disclosed, how information may be used, and the consequences if those rules are broken. NDAs are commonly referred to as confidentiality agreements, and the terms are often used interchangeably. An NDA contract helps safeguard business information during negotiations, collaborations, and other commercial activities.

A confidentiality agreement or NDA is designed to protect information such as business plans, intellectual property, client data, financial details and trade secrets. Confidential information typically includes any non-public material that gives a business value or a competitive edge. These agreements outline:

You should consider using an NDA when:

NDAs can be one-way (unilateral), where only one party discloses information, or mutual, where both parties share sensitive information and require the same level of protection.

A well-drafted NDA should:

Generic NDAs may leave gaps or be too vague to enforce. Tailoring an NDA to the situation ensures it is both practical and legally robust.

Protecting your confidential information is essential to safeguarding your competitive edge. NDAs are a simple but powerful tool to keep your business secure.

Our Corporate Services team can draft confidentiality agreements that protect your interests while enabling commercial discussions to move forward with confidence.

When you incorporate a company in the UK, one of the first legal documents you adopt is the articles of association. These articles form your internal rulebook and set out the framework for how your company is run. Many new companies use the Model Articles of Association provided by the Companies Act model articles because they are simple, cost effective and immediately compliant with UK company incorporation rules.

However, model articles are not always suitable as a business grows. Questions often arise about their flexibility, the model articles quorum issue, the model articles sole director problem, and whether bespoke amendments are needed to support more complex governance.

This guide explains what are model articles of association, how they work, the challenges for sole directors and when to consider changing articles of association.

The model articles of association are a standard set of governance rules that apply automatically if you do not file your own articles during incorporation. They cover key areas such as:

For small or newly formed companies, model articles offer a reliable foundation. They help ensure compliance from day one and reduce the need for complex drafting. However, they are designed as a general framework, not a tailored governance solution.

One of the most debated issues in the articles of association UK framework involves the use of model articles by companies with only one director.

Model articles state that a minimum of two directors are required for decision making. This created uncertainty about whether a sole director could legally act on behalf of the company.

This ambiguity has led to articles of association disputes, including:

Recent case law has clarified that sole director decision making is valid under model articles. However, the articles were never drafted with sole directors in mind. This leaves ongoing risk that decisions could be challenged in the future.

To avoid uncertainty, many companies choose to amend model articles or adopt bespoke articles of association that expressly allow a single director to make decisions.

While model articles are a useful starting point, there are several situations where changing articles of association or adopting bespoke governance structure is strongly recommended.

Two of the most serious risks for directors in financial distress are wrongful trading and misfeasance.

Model articles are not designed for fundraising. If you bring in investors, you may need:

Model articles provide very limited control over how shares can be transferred. Businesses with multiple shareholders often need:

Growing companies often require rules tailored to their structure, including:

In these cases, it is essential to tailor your articles of association to match your long term goals.

If your company has expanded, taken on more directors, attracted investment or diversified, your articles should evolve with the business.

Failure to update or clarify your articles can lead to:

Seeking legal advice on articles of association ensures your governance framework is legally secure and commercially aligned to your needs.

Regular reviewing articles of association helps ensure they continue to support your business strategy. Bespoke articles can provide clarity, reduce risk and prevent disputes.

Franklins Solicitors can help you:

Insolvency is one of the most serious challenges a business can face. For directors, it brings significant legal risks and increased scrutiny. When a company reaches insolvency, the legal duty of directors shifts away from shareholders and towards protecting the interests of creditors. Failure to comply with these changed duties can lead to director liability, misfeasance, wrongful trading, or even director disqualification.

This guide explains the key risks, responsibilities and warning signs for directors, along with essential insolvency advice for directors on how to protect both the business and themselves.

A company is insolvent if it cannot pay its debts as they fall due or if its liabilities exceed its assets. Directors must be alert to signs of insolvency, which may include:

Ignoring these signs increases the risk of insolvency and director claims and exposes directors to allegations of director misconduct. Early recognition allows time to explore business rescue options such as restructuring, refinancing or entering into a voluntary arrangement.

A winding up petition is one of the most serious threats a company can face. It is a formal application to the court requesting that a company be liquidated because it cannot pay its debts. An HMRC winding up petition is particularly urgent because HMRC is one of the most active petitioning creditors.

Consequences include:

Legal advice is essential at this stage. There may still be options to challenge the petition, negotiate repayment or obtain an adjournment depending on the circumstances.

Directors have strict director duties in insolvency. Once insolvency becomes likely, directors must act in the best interests of creditors. This includes:

Failure to comply exposes directors to personal liability for directors, including repayment of losses caused to creditors.

Two of the most serious risks for directors in financial distress are wrongful trading and misfeasance.

This occurs when directors continue to trade knowing there was no reasonable prospect of avoiding insolvency. If proven, directors may be ordered to contribute personally to the company’s debts.

Misfeasance involves breaching your legal duties as a director. Examples include:

Both wrongful trading and misfeasant trading may result in serious financial consequences and director disqualification.

Although a limited company usually protects its directors through the corporate veil, courts can order the lifting of the corporate veil where directors have acted fraudulently, dishonestly, or engaged in gross misconduct.

Situations where personal liability may arise include:

IP and insolvency is an often overlooked risk. Intellectual property can be one of the most valuable assets in an insolvent business.

Directors must:

Proper management of intellectual property supports creditor recovery and increases the prospects of a successful business rescue option.

Effective insolvency risk management involves:

Proactive behaviour helps demonstrate compliance with legal duties and reduces the risk of personal claims.

If you believe your company is insolvent, immediate steps include:

Delay increases risk and reduces available solutions.

Our Insolvency and Corporate teams at Franklins Solicitors provide expert corporate insolvency advice for directors. We help businesses assess financial health, understand their duties and navigate complex legal risks with clarity and confidence.

Insolvency is one of the most serious challenges a business can face. For directors, it brings significant legal risks and increased scrutiny. When a company reaches insolvency, the legal duty of directors shifts away from shareholders and towards protecting the interests of creditors. Failure to comply with these changed duties can lead to director liability, misfeasance, wrongful trading, or even director disqualification.

This guide explains the key risks, responsibilities and warning signs for directors, along with essential insolvency advice for directors on how to protect both the business and themselves.

A company is insolvent if it cannot pay its debts as they fall due or if its liabilities exceed its assets. Directors must be alert to signs of insolvency, which may include:

Ignoring these signs increases the risk of insolvency and director claims and exposes directors to allegations of director misconduct. Early recognition allows time to explore business rescue options such as restructuring, refinancing or entering into a voluntary arrangement.

A winding up petition is one of the most serious threats a company can face. It is a formal application to the court requesting that a company be liquidated because it cannot pay its debts. An HMRC winding up petition is particularly urgent because HMRC is one of the most active petitioning creditors.

Consequences include:

Legal advice is essential at this stage. There may still be options to challenge the petition, negotiate repayment or obtain an adjournment depending on the circumstances.

Directors have strict director duties in insolvency. Once insolvency becomes likely, directors must act in the best interests of creditors. This includes:

Failure to comply exposes directors to personal liability for directors, including repayment of losses caused to creditors.

Two of the most serious risks for directors in financial distress are wrongful trading and misfeasance.

This occurs when directors continue to trade knowing there was no reasonable prospect of avoiding insolvency. If proven, directors may be ordered to contribute personally to the company’s debts.

Misfeasance involves breaching your legal duties as a director. Examples include:

Both wrongful trading and misfeasant trading may result in serious financial consequences and director disqualification.

Although a limited company usually protects its directors through the corporate veil, courts can order the lifting of the corporate veil where directors have acted fraudulently, dishonestly, or engaged in gross misconduct.

Situations where personal liability may arise include:

IP and insolvency is an often overlooked risk. Intellectual property can be one of the most valuable assets in an insolvent business.

Directors must:

Proper management of intellectual property supports creditor recovery and increases the prospects of a successful business rescue option.

Effective insolvency risk management involves:

Proactive behaviour helps demonstrate compliance with legal duties and reduces the risk of personal claims.

If you believe your company is insolvent, immediate steps include:

Delay increases risk and reduces available solutions.

Our Insolvency and Corporate teams at Franklins Solicitors provide expert corporate insolvency advice for directors. We help businesses assess financial health, understand their duties and navigate complex legal risks with clarity and confidence.

When businesses enter into commercial contracts, understanding how risk is allocated is crucial. One of the most powerful tools for contract risk allocation is the indemnity clause. It defines who pays if things go wrong and how financial responsibility is shared between the parties. A poorly drafted indemnity clause can expose a business to significant losses, while a well drafted one offers strong commercial indemnity protection.

This guide explains what an indemnity clause is, how an indemnity works, and why the precise wording of the clause matters.

An indemnity clause is a contractual promise where one party agrees to compensate the other if specific events occur. This usually relates to a breach of contract, but indemnities can also cover third party claims, regulatory breaches or specific commercial risks.

In simple terms, an indemnity clause shifts the financial risk from one party to another. Understanding indemnity meaning in contracts ensures that both sides know exactly what they are responsible for.

Indemnities are often described as operating on a pound for pound basis. This means the injured party should be compensated for the full loss they suffer, without deductions.

Key benefits include:

The indemnity vs warranty distinction is important. Warranties require the claiming party to prove loss and sometimes foreseeability. Indemnities can provide broader protection that goes beyond the standard rules of damages.

One of the most significant differences is that there is often no duty to mitigate indemnity losses. This means the party claiming under an indemnity does not need to prove they took steps to reduce the loss.

Indemnity claims often benefit from extended limitation periods of indemnity, because the time limit usually begins when the loss occurs rather than at the date of the breach.

Indemnities help businesses manage financial risk in contracts through clear allocation of responsibility for losses, costs and damages.

However, it is essential to remember that indemnities do not automatically cover all losses. The scope is determined entirely by the wording of the clause.

Even small changes in the wording of indemnity clauses can significantly alter their meaning. Courts interpret indemnities strictly, which means a clause must be precise and unambiguous.

When interpreting indemnity clauses, the court will consider:

Your franchisor responsibilities may include:

Poorly drafted wording can limit your ability to recover losses or expose you to unexpected liabilities.

Effective drafting indemnity clauses involves careful thought about the commercial risks involved. A clause may include:

Skilled drafting ensures the clause reflects the true commercial intentions of both parties.

When you give an indemnity, you accept significant indemnity obligations. This may include responsibility for:

These obligations can create extensive contract indemnity risks if not negotiated carefully.

Businesses should never assume that standard indemnity wording is suitable for every contract. Effective negotiating indemnity clauses involves:

Different types of indemnity clauses may include:

Each must be tailored to the contract and industry involved.

Because indemnities can involve large financial consequences, the clause must be drafted with precision. Indemnities are interpreted strictly and courts do not rewrite unclear wording. Strong drafting protects your business from unexpected liability.

Whether you are giving or receiving an indemnity, understanding how the clause operates is essential before signing any contract. Professional indemnity legal advice can ensure the wording is fair, enforceable and commercially appropriate.

Franklins Solicitors can assist with:

We help businesses protect themselves through clear and effective contract drafting.

Expanding through franchising can be one of the most effective ways to grow your brand, increase market reach and scale your business with limited capital. However, success as a franchisor depends on building your franchise on strong legal foundations. A clear franchise business model, a robust franchise agreement for franchisors and reliable dispute resolution processes are essential for protecting your brand and maintaining a healthy franchise network.

This guide explores franchising for franchisors, including how to franchise your business, protect your intellectual property and manage franchisee relationships with confidence.

Before offering franchises, you must ensure your business model can be replicated consistently across multiple locations. Becoming a franchisor requires more than simply licensing your name. It involves the creation of a structured and proven system that franchisees can operate effectively.

Key steps include:

The operations manual will form the backbone of your franchisor franchisee relationship, ensuring brand consistency across the network.

Effective intellectual property protection for franchisors is essential. You must secure trademark registrations, protect confidential methods and ensure your brand assets cannot be exploited without permission. Strong brand protection reduces risk, supports consistency and strengthens your competitive advantage.

The franchise agreement is your main tool for protecting your brand. It governs the rights and obligations between the franchisor and the franchisee. A professionally drafted agreement should cover:

Using generic templates can leave serious gaps that damage your brand and your network. Expert drafting avoids ambiguity and reduces disputes.

As your franchise grows, managing the network becomes more complex. Effective franchise network management ensures franchisees maintain standards, operate compliantly and protect the brand.

You must strike the right balance between allowing franchisees independence while maintaining control over essential elements of the business. Too much control may be difficult to enforce, while too much independence risks inconsistent service and reputational damage.

Your franchisor responsibilities may include:

Clear franchisor obligations set expectations and help prevent misunderstandings within the network.

Even with strong agreements, disputes can arise. Typical common franchise disputes include:

These disputes can damage brand reputation and disrupt the network if not managed swiftly.

When conflicts arise, effective processes protect your brand and relationships.

Small issues can quickly become major problems if left unchecked. Address concerns as soon as they arise.

Most franchisor agreements include a process such as negotiation, franchise dispute mediation or arbitration. Mediation is often a cost effective option and can preserve relationships.

Franchisors must enforce standards while maintaining positive relationships. In many cases, preserving goodwill and working collaboratively can deliver better long term outcomes than taking a strict legal approach.

Franchising offers powerful growth potential, but only when supported by strong legal structures. Investing in professional franchisor legal advice can help you create watertight agreements, protect your brand and manage risks within your network.

Our Corporate and Commercial Team at Franklins Solicitors supports franchisors with:

Effective corporate governance is not simply an administrative routine. It is the foundation of strong leadership, sound decision making and director accountability. Whether you manage a fast growing SME or a newly incorporated business, understanding how to run board meetings and how to create keeping accurate board minutes is essential for compliance and long term organisational success.

This guide explains the practical and legal requirements for board meeting procedures, what should be covered in each meeting and how to ensure your minutes meet legal standards.

A board meeting must be convened properly to be legally valid. Failure to follow correct procedures may result in decisions being challenged on the basis of procedural irregularity in board meetings.

Key requirements include:

All directors must receive reasonable notice of the date, time and purpose of the meeting. Notice periods may be set out in the company’s articles of association, but notice must always be long enough to allow directors to prepare.

A well prepared board meeting agenda helps directors focus on priority issues. This should outline discussion points, proposals for approval and any documents requiring review. A detailed agenda improves efficiency and supports strong corporate governance.

Meetings may be held in person, online or as a hybrid. The chosen format must comply with the articles and ensure directors can participate fully.

A valid meeting requires a minimum number of directors. The quorum for board meetings is usually two, unless the articles specify otherwise. Without a quorum, decisions made may be invalid.

Correctly convening a meeting is essential to maintain board meeting legal validity and to protect directors from claims that decisions were improperly made.

Board meetings should focus on matters that require director oversight and strategic input. Common agenda categories include:

Using board packs allows directors to review all documents in advance. A good board pack may contain financial reports, draft contracts, risk assessments or performance data. Prepared board packs support more informed debate and contribute to good corporate governance practices.

Well planned meetings ensure compliance with company decision making requirements and allow directors to demonstrate they have fulfilled their statutory duties.

Directors must comply with a range of statutory duties under the Companies Act. During board meetings, directors should demonstrate that they have:

Strong director compliance obligations and director accountability are central to effective governance.

Board minutes are not simply administrative records. They are the official and legal documentary evidence of what was discussed and decided. They may be required by:

Accurate minutes protect the company and the directors.

Good minutes should:

Minutes that are vague or incomplete can damage credibility and fail to show that directors acted responsibly. Strong minute taking supports compliance with legal requirements for board minutes and strengthens record keeping for directors.

To ensure minutes meet legal and governance expectations, businesses should:

Accurate minutes improve transparency, reduce risk and demonstrate strong corporate governance for SMEs and larger organisations alike.

To ensure high quality governance, businesses should implement the following best practice board meetings approach:

These practices promote consistency, compliance and accountability across the organisation.

Good governance is essential to business resilience. Our Corporate Services Team at Franklins Solicitors can help you with:

Your terms and conditions are the foundation of your commercial relationships. Whether your business supplies goods, provides services or trades online, your terms and conditions define the rules of the contract. Despite their importance, many businesses do not properly incorporate their terms, which leaves them exposed to avoidable disputes. Understanding the incorporation of terms and conditions, the battle of the forms, and the enforceability of penalty clauses is essential for commercial protection.

This guide explains the legal basics you need to know and why reviewing terms and conditions with a specialist solicitor is vital.

Simply having a set of terms and conditions is not enough. Under UK contract law, your terms must be validly incorporated at the correct stage of the contract formation process.

To ensure proper incorporation:

Businesses often lose disputes because the court finds that the terms were presented too late. Understanding contract formation rules is therefore crucial when working with customers and suppliers. If your terms are introduced after acceptance, they may not form part of the contract at all.
Clear and consistent processes are the best way to ensure that your terms are legally binding.

The battle of the forms arises when two businesses each try to impose their own terms and conditions. For example, a supplier might send its terms with a quotation, and the buyer may then send a purchase order containing different terms.

Courts in the UK apply the last shot rule. This means the terms that govern the contract are usually the ones sent last before the final acceptance of the contract. As a result:

Businesses often assume their terms apply simply because they always use them. In reality, the battle of the forms often results in the opposite party winning the argument.

Strong internal processes and clear communication can prevent expensive contract disputes relating to terms.

Penalty clauses are frequently included in contracts to deter late payment, delays or breaches. However, under English law, not all penalty clauses are enforceable.

Courts will only enforce penalty clauses if they meet specific legal requirements. To be valid, a clause must either:

If a clause is excessive, unfair or punitive, it may be considered unenforceable.

For example:

The enforceability of penalty clauses is assessed on the facts of each case and must reflect genuine commercial reasoning rather than punishment.

Understanding penalty clauses UK law is essential when drafting terms and conditions or when dealing with a contractual dispute.

Some terms may be unenforceable if they are considered unfair, unclear or hidden. This is particularly relevant when contracting with consumers, but it can also affect business to business contracts.

Courts focus on transparency, fairness and clarity. If a term is considered unfair, it may be removed entirely, leaving your business exposed.

Regular reviewing terms and conditions helps ensure compliance with modern UK contract law and avoids legal risks.

Well drafted commercial contract terms can protect your business in areas such as:

Taking professional business terms and conditions advice ensures that your terms are tailored to your business model, commercially realistic and enforceable. Boilerplate templates are rarely sufficient, and many businesses do not realise they are relying on outdated or invalid terms.

Strong terms and conditions are not mere paperwork. They are one of the most important legal tools your business has. Clear wording and correct incorporation help prevent disputes and provide certainty in your commercial relationships.

The Corporate Services Team at Franklins Solicitors can support you with: