Shareholder Employee Dismissal & Resignation Clause Template

Shareholder Employee Dismissal And Resignation Clause

CO.SH.02.04

This Shareholder Employee Dismissal and Resignation Clause (otherwise 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. 

Under Sub-Clause 1.1 of this Shareholder Employee Dismissal and Resignation Clause any shareholder who is also an employee of the company and who subsequently leaves employment through termination shall be obliged to offer his shares up for sale to the other shareholders. There is optional wording in square brackets to extend this obligation to those who resign.

At 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 that is already specified in the agreement and using wording that allows for the auditors to specify the price.

Sub-Clauses 1.3 to 1.5 offer a certain amount of protection to the employee shareholder who is dismissed unfairly or wrongfully. The sub-clauses provide that in such circumstances, they 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.

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

Please click here for Good Leaver/Bad Leaver Shareholder Agreement (New Share Issue)

Please click here for Good Leaver/Bad Leaver Shareholder Agreement (No Share Issue)

This document is in open format. Either enter the requisite details in the highlighted fields or adjust the wording to suit your purposes. Wording in square brackets is optional. If the wording is required, then the square brackets can be deleted, otherwise all the wording between the square brackets should be deleted.

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