Clarity, Control and Continuity: Strengthening Shareholders’ Agreements for Family-Owned Businesses

Shareholders’ agreements are among the most important documents for any business with more than one owner. They set out how decisions are taken, how responsibilities are shared, how shares can be transferred, and how disputes can be resolved. When drafted clearly, they provide stability. When drafted poorly, they create confusion, delay and unnecessary conflict.

Senior Associate, Marco Difato, recently advised on a shareholders’ agreement for a company jointly owned by two family groups. Each family held half of the shares, so the agreement needed to provide absolute clarity on how ownership and control operated within and between the two sides. The existing draft, produced elsewhere, was highly technical and overly complicated with legal jargon. Although well intentioned, it did not address the practical concerns of the families or provide the simplicity and certainty they needed in day-to-day operations.

Our first step was to understand the relationship between the families, how decisions were made in practice, and what they considered fair and workable. From there, we carried out a detailed review of the draft and identified which provisions were causing confusion and which areas required more structure and transparency.

The most important section concerned the transferability of shares within and between the family groups. The families wanted a clear and predictable process that ensured shares stayed within their respective groups wherever possible, while also setting out what should happen if a family member no longer wished to hold shares or if no internal buyer could be found.

We re-drafted these clauses in plain English, building a logical, step-by-step process that the families could follow without ambiguity. This included rules governing internal transfers, valuation methods, notice requirements, and the circumstances in which shares could be offered to the other family. The result was a practical and enforceable mechanism that reflected the commercial reality of the business.

This approach eliminated unnecessary jargon and reduced the risk of future misunderstandings. It also demonstrated our belief that clear drafting is powerful drafting. Effective legal documents should not rely on complexity to appear sophisticated. They should be accurate, transparent and aligned with how the business operates in reality.

For family-owned companies, these qualities matter even more. A shareholders’ agreement must do more than outline legal rights. It must protect relationships. It must preserve trust. It must provide a roadmap for future generations who may inherit both the shares and the responsibilities that come with them.

At Adam Benedict, we help businesses establish robust and practical frameworks from the start. By combining legal expertise and accuracy with commercial insight, we ensure that our shareholders’ agreements support long-term harmony, protect value and provide confidence for the years ahead.

Interested in creating or updating your shareholders’ agreement? Get in touch today to see how we can help.