Deed of Adherence

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What is it?

A Deed of Adherence is the document required when a new shareholder is added to a company that has a Shareholders' Agreement already in place. This document must be signed before the new shareholder can receive shares and makes it a party to the Shareholders' Agreement.

Why do you need it?

In situations in which a company's shareholders have signed a Shareholders' Agreement, a Deed of Adherence is always required when a new party either invests in the company or purchases shares from one of the shareholders, if the shareholders wish to remain bound by the terms of the original agreement.

Key clauses to watch for:

When drafting a Deed of Adherence, it is important to focus on a number of key clauses, in particular:

  • Details of the company;
  • Details of the new party named in the deed;
  • Continuing and outgoing parties in the deed;
  • Status, number, class, and price of the shares; and
  • Date of the Deed of Adherence.

Deed of Adherence Document

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