SME Expansion & M&A



We have listed below some suggested legal templates that can be used to help expand your business by external investment, organically, as well by acquiring other businesses or by selling yours. Also included are templates for borrowing money to assist expansion and development.

Of course, there will be other matters that will require coverage by legal agreements, and this collection is not meant to be comprehensive. Rather, it is a prompt for you to see what else you need to get sorted out as your business expands into new relationships. Please also browse our main menu for ideas of what other legal documents you require.


Template: Shareholders' Agreement: standard version

"This agreement provides a very thorough framework for the shareholders of any private company to set out the precise structural management of their business. It covers the provisions that will be important to owners of most private limited companies. A shareholders’ agreement is an essential document for the owners of any company. It re-balances control when there is different levels of involvement and power in day to day decisions, and protects the value and the interests of each party.

Not only should this template help you establish the strategic management structure you need to grow your business, but also ensure that your investment is protected when you or other owners decide to sell."

Template: Employee Share Option Agreement

"Use this agreement to grant a share option to an employee that can be exercised once the valuation of the shares has increased past a given amount. This document is likely to be used by an employer to motivate an employee working in any capacity. The business of the company and the role of the employee are not important to the effect of the agreement. The same document could be used for many employees (such as each director or senior manager), with terms varied for each."

Template: Employment Pack

"In order to make it easy to comply with the law when hiring your first employees, we have bundled together the most commonly used employment documents, notably contracts. The pack has been designed to save you money on buying these documents separately.

  • Statement of particulars of employment
  • Employment contracts: for senior staff and for regular employees
  • Zero hours contract for casual workers
  • Letters to vary existing contracts of employment
  • Equal opportunities and non-harassment policy
  • Letter to an employee refusing request for flexible work hours"

Template: Loan Agreement: company borrower; secured on physical assets; guarantor option

"An agreement between a lender, who may be an individual or a corporate body, and a borrower, who is a company. It is drawn so that the lender is also a corporate body, but it could as easily be an individual or a trust. The loan is secured with a fixed charge on specific physical assets, and optionally, a guarantor. 

We have provided for security in the form of physical assets to be lodged or described. There is also full provision for a personal guarantee. The security could be any goods or property, not necessarily that which is bought using the loan"

Template: Company Purchase agreement: part payment retention

"This is a comprehensive purchase agreement to buy a single company that has no subsidiaries. The deal gives extra protection to the buyer through part of price being held back and released later, conditional upon profit. This agreement is suitable for any size of company in any industry. It is suitable for low or high value transactions and for absolutely any sort of business."

Template: Share Sale and Purchase Agreements

"This is an agreement for the sale of a majority or a minority shareholding in a private company for cash (rather than shares). The company could be in any industry, and the seller and the buyer could be private individuals or other companies. The document comes with an extensive choice of warranties designed to protect the value of your investment and give you the greatest legal advantage."

Template: Share Purchase & Subscription Agreement

What Net Lawman says about this template:

"This is a comprehensive agreement for a new shareholder - an individual or another company - to subscribe for new shares in a private limited company at the same time as buying shares from one or more other existing shareholders. 

This single document records two types of transactions at a time: a new shareholder subscribes for a newly issued shares whilst at the same time buying shares from existing shareholders.

A full raft of warranties protects the new shareholder’s investment as if he were buying whole company outright.

We include an optional provision for a reduction in the final price paid if company profit is not as expected.

The document provides the option to reference any loan the buyer may be making. The terms of any loan will need to be covered in a separate loan agreement

There are also options:

  • as to whether all shareholders are to be bound by warranties or only those who have intimate knowledge because they run the company - the directors
  • to include a guarantor.

It is most likely to be used when a new shareholder wishes to take majority control.

The company may be in any industry and of any size.

The document assumes the subscriber pays in cash but holds back an agreed sum until after the next set of accounts. If the accounting profit is not as promised, then the final balancing payment is reduced.

This agreement provides the same protection to the subscriber as you would expect if the whole company were being bought outright. You have the benefit of 140 warranties (less those you decide to edit out). The penalty reduction of balance due by you is calculated by reference to a simple, flexible formula.

There is an option for one of the selling shareholders to be a trustee (as a trustee, he cannot give warranties).

As drawn, the document binds all the shareholders to the warranties, but you could decide that only shareholder-directors should be at risk.

The document provides the option to reference any loan the buyer may be making. The terms of any loans will need to be covered in separate loan agreements.

Warranties

These are explained in more detail here, but simply put, a warranty is a promise that something is as it is described, and which, if untrue, can allow the side relying on that information to seek compensation.

This document differs from many other shares subscription agreement templates in the number of warranties included.

Warranties are important for two reasons.

The first is that they protect the new subscriber, who does not have the same information as the directors and other shareholders about the state (and value) of the company.

The second is that they can improve the subscriber’s position. Because it is normal practice for subscribers to demand warranties, shareholders often give them without being sure about whether the situation is as warranted. New subscribers can take advantage by asking for more warranties than they might need, and later seeking compensation for those that turn out to be false.

We provide a very full set of warranties, in plain English so it is easy to choose whether you want each to be given or not. Existing shareholders will, obviously, want to limit the warranties given."

Template: Loan Agreement: company borrower; secured on physical assets; guarantor option

What Net Lawman says about this template:

"This agreement is for a loan to a company or other corporate body, or a trust. It is drawn so that the lender is also a corporate body, but it could as easily be an individual or a trust.

The agreement may be for a loan to a family member's business; an arm’s length investment for interest; or for any other reason.

We have provided for security in the form of physical assets to be lodged or described. There is also full provision for a personal guarantee.

The security could be any goods or property, not necessarily that which is bought using the loan.

The loan is secured by the borrower either taking physical possession or leaving the assets in place and describing them in detail in this document so that there can be no dispute as to what is charged.

This document provides the evidence that the item is secured to the lender. Remember that a dispute as to entitlement is more likely to be against a liquidator or receiver than against the borrower.

There is an option for the lender to have use of the security from time to time. For example a property developer may lend money to a builder to buy materials, but wants to be able to use a mechanical digger for his business as part of the deal.

Because the borrower is a company, we have included a number of warranties. These take effect as promises by the borrower as to aspects of its financial state. We have also provided that the signatory accepts personal liability for his proper authorisation. To some extent that person is bound in the same way as the company.

Registration of the charge

If the borrower is a company then it is required to register the charge at Companies House.

This agreement provides explicitly that the company will register the charge contained in it. The debt will then be valid against  a liquidator or administrator, should the company become insolvent.

When the debt is repaid, whether fully or in part, the company has no obligation to inform Companies House. However, it is in the company's own interests that potential investors and lenders are aware that it has satisfied all or part of the debt."

Template: Loan Agreement: company; secured on financial instruments

What Net Lawman says about this template:

"This agreement is for use when the party borrowing money is a company or other corporate body, or a trust.

It is drawn so that lender is also a corporate body, but he, she or it may as easily be an individual or a trust.

We have provided for both a personal guarantee and for other security in the form of shares or other financial assets.

The loan is secured by lodging documentary securities with the lender. Where there is no paper copy of evidence of ownership, this document provides the evidence that the item is secured to the lender.

If the value of the security falls below a specified level, the lender can call on the borrower to top it up. In addition, at any time, and without giving a reason, the lender may call for the transfer of title to any or all of the securities to him. If there is no accepted system of registration of ownership, that is the only way the lender would be protected in situations of default.

Additionally, the reason for the transfer should be set down in a letter so that the security can be passed back to the owner when the loan has been repaid, without tax or other problems.

The guarantee is worded to cover every obligation that a borrower might have. If a guarantee is not required, it may be deleted easily.

Because it is a company that is borrowing the money, we have included a number of warranties. These take effect as promises by the borrower as to aspects of its financial state. We have also provided that the signatory accepts personal liability for his proper authorisation. To some extent that person is bound in the same way as the company.

Registration of the charge

If the borrower is a company then it is required to register the charge at Companies House.

This agreement provides explicitly that the company will register the charge contained in it. The debt will then be valid against  a liquidator or administrator, should the company become insolvent.

When the debt is repaid, whether fully or in part, the company has no obligation to inform Companies House. However, it is in the company's own interests that potential investors and lenders are aware that it has satisfied all or part of the debt.

You can read further about choosing an appropriate form of security."


Detailed guidance notes are provided with each template. Net Lawman offers a money back guarantee if the document is not what you need, as well as a legal review option if you want some professional assistance when you are drawing up your documents.

Notice:

The documents menus are designed to describe the documents, but please be sure that you check them over carefully to ensure that they do meet your needs. All documents are subject to Net Lawman's Terms and Conditions, which we ask you to read before you purchase any documents.

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