Deed of Adherence

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Use this Deed of Adherence to join a new shareholder to an existing shareholders agreement.

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Deed of Adherence Template

A Deed of Adherence needs to be used when a new shareholder joins a company which has a shareholders agreement in place between its shareholders. This usually happens when shares of one shareholder are sold to a new shareholder.

When you start up a business you have many documents that you will need on hand. You will need employee documents, contracts, and much more. Part of the documents you will need include the Deed of Adherence. The Deed of Adherence is used when a new shareholder joins in a business venture. It is only used in companies that have a Shareholders Agreement in place. In other words if your company will be selling shares to other individuals you will need a Deed of Adherence. Typically the Deed of Adherence is used when you have one shareholder selling shares to a new shareholder.

The document will be used where a person becomes a shareholder and they must be party to a Shareholders Agreement because it was entered into before the new person obtained their shares.

Any shareholder who wishes to dispose of their shares or transfer them to another person must check with the original Shareholder Agreement. In some cases it is not permissible to transfer or sell shares to another in Shareholder Agreements; however, this is rare. Typically there is a consent that needs to occur for the transfer to happen. This consent may need the majority of shareholders to accept the transfer.

The person obtaining the shares will have to be “vetted.” Basically the company will assess if the person obtaining the shares is permitted to hold such shares. The company will also check to see if the holder is registered and that they have entered into a Deed of Adherence. The new shareholder will be bound to the original Shareholders Agreement. This is what the Deed of Adherence is for.

The company cannot register the individual as the new shareholder until the shares are transferred through a Deed of Adherence. If the shares are not transferred through a Deed of Adherence the shareholder will be in breach of the provisions of the original Shareholder Agreement. At this point they would need to sign a Deed of Adherence and complete the transfer accordingly.

For your new company you want to make sure you are transferring all shares properly. You, as the owner will own all of the company shares. You can determine how you want to disburse the shares and whether you will permit anyone to purchase close to half your shares. You will also have to have any shareholder sign the Deed of Adherence form to transfer the shares properly.

On this site you have many of the business start up documents you need including the Deed of Adherence. The Deed of Adherence template can be customised to fit in your business regarding the amount of shares and how you wish to transfer them to new shareholders. The document will have the proper legal information to ensure you and your business will be protected when shares are transferred. Protecting your business is essential especially when it comes to the shares you are willing to sell and who you would like to have those shares, making the Deed of Adherence template imperative.