Shareholder Employee Dismissal And Resignation Clause

This Shareholder Employee Dismissal and Resignation Clause (sometimes known as a “good leavers / bad leavers” clause) can be incorporated into a shareholders’ agreement and is intended to provide a ready-made customisation for the existing Simply-Docs Shareholders’ Agreement templates.

When an employee shareholder must offer shares for sale

Under Sub-Clause 1.1, any shareholder who is also an employee of the company and who subsequently leaves employment through termination is obliged to offer their shares for sale to the other shareholders.

Sub-Clause 1.1 includes wording to extend this obligation to those who resign.

Timing and pricing approach on a transfer

Under Sub-Clause 1.2, the time period during which the transfer must be completed should be inserted.

A choice must be made between using a method of determining the price per share already specified in the agreement and using wording that allows for the auditors to specify the price.

Protection for unfair or wrongful dismissal

Sub-Clauses 1.3 to 1.5 provide protection to an employee shareholder who is dismissed unfairly or wrongfully.

In those circumstances, the employee shareholder will not be obliged to offer their shares for sale, but will instead have the right to offer them for sale.

As with termination and dismissal on unfair grounds, the method of determining the price per share should be chosen together with the time periods involved.

Where similar wording is already included

For customer ease, this clause (with minor variations) has been added into two of our Shareholder Agreements:

• here for Good Leaver/Bad Leaver Shareholder Agreement (New Share Issue).
• here for Good Leaver/Bad Leaver Shareholder Agreement (No Share Issue).

Shareholder Employee Dismissal And Resignation Clause is part of Corporate. Just £38.50 + VAT provides unlimited downloads from Corporate for 1 year.