Shareholders’ Agreements & Loan Agreements - DHKN Galway

Shareholders’ Agreements & Loan Agreements

Shareholders’ Agreements

A shareholders’ agreement is an agreement between some or all of the shareholders in a company and, in some cases, the company itself for the purposes of setting out the rights and obligations of the parties concerned and providing for the management of the company and to address future issues that could arise that could otherwise cause disagreement or confusion if not agreed in advance.

A shareholders’ agreement should be appropriate for the parties concerned and therefore careful review of the particular circumstances of the shareholders and their intentions and of the Company together with its business and possible future occurrences should be carried out before a shareholders’ agreement is entered into.

We can advise and assist you in considering the matters pertaining to your company that you ought to give consideration to and thereafter draft a shareholders’ agreement tailored to your specific requirements.

Loan Agreements

The importance of having loan agreements in place between directors and their company has become more important than ever since the enactment of the Companies Act 2014.

In relation to loans by a company to its director, the assumptions are that the loan is repayable on demand and has borne interest at five per cent.

For loans by a director to a company, the assumptions are that the loan is not in fact a loan but rather a gift to the company, that it bears no interest and is unsecured.

To avoid these assumptions being applied in any civil proceedings, the arrangements applying should be specifically set out in the loan agreement between the parties.

Separately, any loan agreements to be entered into by your company with other parties should be reviewed in advance and approved at a board meeting of the directors as a minimum.

The summary approval procedure contained in the Companies Act 2014 is intended for use by companies in connection with loan arrangements by a company to a director or connected person.

We can guide you through the above procedures and draft documentation tailored to the particular circumstances of your company.

Our Experts

George Alton ACG

Associate Director
Corporate Governance & Compliance


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