Deed of Adherence
When a company has a shareholders’ agreement in place, it’s important to ensure that all shareholders are party to it. When a shareholders’ agreement is originally created, all of the existing shareholders will have signed it and thus become bound by its terms.
After this date, the company may gain new shareholders, which is where a deed of adherence would be used. A deed of adherence is a short contract under which the new shareholder becomes bound by the shareholders’ agreement. We provide examples for scenarios where new shares are issued to a new shareholder, and where existing shares are transferred to a new shareholder.
A deed of adherence will not be needed for the articles of association, as these automatically apply upon becoming a shareholder, whereas the shareholders’ agreement is a private contract. Similarly, an existing shareholder will not be required to enter into a deed of adherence each time they are issued new shares.
It is important to note that deeds of adherence must be signed as deeds and therefore must be signed in the presence of an independent witness, who will also sign the document and provide their personal details. Witnesses must be 18+ years of age, not related to the Principal (including partners), and not involved in the matter the deed of adherence relates to.
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