Deed of adherence

I am looking for...

Home » Contracts » Shareholders » Deed of adherence

What is a deed of adherence and when is it used?

Put simply, when a business has existing shareholders or partners it’s important that when a new shareholder or partner joins they agree to comply with the terms of any existing shareholders agreement or partnership agreement. A deed of adherence is the form of document which is likely to be the quickest and cheapest way of ensuring compliance.

Is it that straightforward?

Sometime yes, sometimes no. As with all things legal no 2 matters are the same, it all depends on the context and the devil is in the detail.

There will generally be negotiations, formalities and complications the more shareholders or partners are already involved in the business. This can mean that a deed of adherence may involve additional complications and it might be more practical and cost effective to have a new shareholder or partner agreement instead.

Complications can arise especially if the existing shareholder or partner agreement is badly drafted, not comprehensive enough or unacceptable to the new shareholder or partner. It’s also important to understand with a limited company that a shareholder agreement will need to be looked at in conjunction with the company’s articles of association.

The best way to ascertain how to proceed is to get good legal advice at the beginning, and we are experienced and practical. Get in touch to discuss how we can help and costings.