Heads of Agreement (New Company) (A108)

Who can use these Heads of Agreement?

This is a three party agreement, suitable for three individuals proposing to set up a new company in which each of them will be a shareholder and a director. It is a sensible length for the initial agreement between the participants.

What are the main issues?

They include:

Share capital: how much will each of the shareholders contribute.

Management of the Business. What role will each of them have in running the business, will they all be directors and what decisions will need the agreement of all three partners.

Practicalities  such as who will be the bankers, and accountants

Deadlock. If  shareholders in a company have a major row about the direction of the business, a “deadlock clause” could be useful. It can offer a way of going through a mediation process to try to resolve the issue. Failing this, one or more shareholder might sell to the other(s) or the company could be wound up.

Formal Agreement.  A more detailed Shareholders Agreement will be signed, probably within  a fixed time period.  This will deal with the  sale of shares, restrictions and a lot more.

What detailed terms does the document contain?

This is a 4 page document with 14 clauses covering

• objectives
• company formation
• initial capital
• additional capital
• profits policy
• directors
• management of business
• matters requiring unanimity
• bankers
• accountants
• deadlock
• good faith and non-competition
• preparation of a formal shareholders’ agreement
• governing law and disputes

You need this document if you’re looking to ensure clarity and safeguard the interests of shareholders. Also see our Checklist for Shareholders Agreement.

Our contracts are accompanied by detailed Explanatory Notes with useful information as well as dealing with individual clauses in the document you download.

If you have any questions about a contract and/or want to see these Notes before you buy, please let us know by using our contact form

For a two party shareholders’ agreement template, see Document A107.

When I download the document, can I change it and/or use it more than once?

Yes, all ContractStore’s templates are in MS Word and you can use the contract on more than one project. For more information, watch the video on this page of our website or see our FAQs

Legal support

ContractStore supplies templates and is not a law firm.  But all our templates are written by experienced lawyers so we can arrange legal assistance for customers who need special terms in one of our documents or a bespoke template. . For more information see our Legal Services page.

Contract author: Giles Dixon is a solicitor with considerable experience of setting up shareholder agreements, whether for start-ups or major joint venture companies.

And if you want to contact us see our Contacts page.