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Welcome back to IMD Corporate’s Business Insights Series! In this episode, Olexandr Kyrychenko, Partner at IMD Corporate and an expert in corporate and commercial law, delves into the essential legal documents every business needs to establish a solid foundation.

Listen and stay informed!

Key Points

1. Corporate Documents

• Articles of Association:
  • The Articles serve as the governing document or “constitution” of a company.
  • While standard model articles are available by default, they often fail to meet the specific needs of businesses, such as including provisions for different share classes, pre-emption rights, and director appointment rights. Bespoke or amended articles are strongly recommended.
  • Risks of using model articles include exposure to third-party shareholders without appropriate shareholder approval and insufficient protections for minority shareholders or investors.
• Shareholders’ Agreements:
  • A shareholders’ agreement is a contractual document that governs the relationships between shareholders, including minority protections and mechanisms for resolving disputes.
  • While not legally required, it is vital for avoiding deadlock, addressing breaches of conduct, and ensuring smooth business operations.
  • Risks of not having an agreement include unresolved disputes, paralysis of decision-making, and a lack of recourse against shareholders acting against the company’s interests.

2. Other Essential Legal Documents

• GDPR Compliance Documents:
  • Businesses handling personal data must have compliant GDPR policies in place, adhering to the UK GDPR and the Data Protection Act.
  • Internal policies for managing data and responding to data subject requests are equally important to avoid substantial fines and reputational damage.
• Directors’ Service Agreements (DSAs):
  • A DSA formalises the relationship between the company and its directors, setting out roles, remuneration, confidentiality, and termination clauses.
  • It ensures compliance with the Companies Act 2006, safeguards the company’s interests, and mitigates risks relating to breaches of fiduciary duty or disputes.

This podcast is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this podcast was published.

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