Shareholder Exit Agreement

Free Shareholder Exit Agreement Template

Use this free template as a starting point for documenting a shareholder's exit from a company. Copy and customise it to suit your articles of association, shareholders' agreement, and the agreed exit terms.

SHAREHOLDER EXIT AGREEMENT

Date: [Date of agreement]

Parties:

(1) Exiting Shareholder: [Full name], of [Address] (the "Exiting Shareholder")

(2) Continuing Shareholders: [Names and addresses of remaining shareholders], collectively the "Continuing Shareholders"

(3) Company: [Company name], a company incorporated in [Jurisdiction] with company number [Number] and registered office at [Address] (the "Company")

Background

A. The Exiting Shareholder holds [Number] [Class] shares in the Company (the "Exit Shares"), representing approximately [X]% of the Company's issued share capital.

B. The Exiting Shareholder has agreed to exit the Company on the terms set out in this Agreement.

C. The exit will take effect by way of [share sale to the Continuing Shareholders / share buyback by the Company / a combination of the two].

1. Exit Date

The exit takes effect on [Effective date] (the "Exit Date"). From the Exit Date the Exiting Shareholder shall cease to be a shareholder of the Company in respect of the Exit Shares.

2. Transfer of Shares

[Option A: Sale to Continuing Shareholders]

On the Exit Date, the Exiting Shareholder shall transfer the Exit Shares to the Continuing Shareholders in the proportions set out in Schedule [1], and the Continuing Shareholders shall pay the Consideration to the Exiting Shareholder in accordance with clause 3.

[Option B: Share Buyback by Company]

On the Exit Date, the Company shall purchase the Exit Shares from the Exiting Shareholder out of distributable profits / capital, in accordance with sections 690 to 708 of the Companies Act 2006 (or equivalent provisions in the applicable jurisdiction) and the Company's articles of association. The Exit Shares shall be cancelled upon purchase.

3. Consideration

• Total consideration for the Exit Shares: [Currency and amount] (the "Consideration")
• Valuation basis: [as agreed between the Parties / as determined by [Independent valuer] in accordance with the Shareholders' Agreement dated [Date]]
• Payment terms: [Lump sum on Exit Date / Instalments over [N] months as set out in Schedule [2]]
• Payment method: [Bank transfer to [account details]]
• Late payment: any unpaid sum carries interest at [statutory rate / contractual rate] from the due date until payment.

4. Dividends and Distributions

The Exiting Shareholder is entitled to receive their share of any dividend declared and accrued for the period up to (but not including) the Exit Date, calculated pro rata to the Exiting Shareholder's holding immediately before exit. The Exiting Shareholder has no entitlement to dividends or distributions declared after the Exit Date.

5. Resignation from Office

If the Exiting Shareholder holds any office in the Company (including director, officer, employee, or consultant), the Exiting Shareholder shall resign from all such offices with effect from the Exit Date by signing the resignation letters in the form of Schedule [3]. Such resignations are without entitlement to compensation for loss of office, save as expressly agreed in this Agreement or as required by law.

6. Restrictive Covenants

For [12] months following the Exit Date, the Exiting Shareholder shall not, without the prior written consent of the Continuing Shareholders:

• Solicit or accept business from customers of the Company with whom the Exiting Shareholder had material dealings in the [12] months before the Exit Date
• Solicit or employ employees of the Company active at the Exit Date
• Engage in any business that competes directly with the principal business of the Company within [geographical scope]
• Hold themselves out as a current shareholder, director, or representative of the Company

These restrictions apply only to the extent reasonable and enforceable under applicable law.

7. Confidentiality

The Exiting Shareholder shall keep confidential, and shall not use or disclose to any third party, any non-public information of the Company, its customers, suppliers, or employees, except (a) as required by law or court order, or (b) with the prior written consent of the Company.

8. Mutual Release

Subject to the obligations expressly preserved by this Agreement, and conditional on the payment of the Consideration in full:

• The Exiting Shareholder releases the Company and the Continuing Shareholders from all claims arising out of or in connection with their shareholding or any office held in the Company up to the Exit Date.
• The Company and the Continuing Shareholders release the Exiting Shareholder from all claims arising out of or in connection with the Exiting Shareholder's role as shareholder or officeholder up to the Exit Date.

9. Tax

Each Party is responsible for their own tax liabilities arising from this Agreement. The Parties intend to treat the exit as [a sale of shares / a share buyback] for tax purposes and shall cooperate in the filing of any required returns.

10. Further Assurance

Each Party shall execute such further documents and do such further acts as are reasonably necessary to give effect to this Agreement, including signing stock transfer forms, updating the register of members, filing forms at the relevant companies registry, and notifying banks and counterparties of the change in shareholding.

11. Governing Law and Disputes

This Agreement is governed by the laws of [Jurisdiction]. Any disputes shall be resolved by the courts of [Jurisdiction], without prejudice to any arbitration or mediation clause separately agreed.

Signatures:

The Exiting Shareholder:

_ Date: _ [Name]

For and on behalf of the Continuing Shareholders:

_ Date: _ [Name], [Position]

For and on behalf of the Company:

_ Date: _ [Name], [Position]

This is a basic template provided for informational purposes. For a professionally generated and legally tailored document, use Bind's contract automation platform.