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Me Ltd again
We have previously considered "Me Ltd" where the same person is director and shareholder but the company is a different legal person. Usually, there is no need for a constitution or, if required, a rudimentary one will be sufficient. Most of the rules relating to the company will be contained in the Companies Act 1993. No shareholders' agreement is necessary.

Me and You Ltd
A variation on the above is where 2 persons are directors and shareholders. Often, they are spouses or partners (same or different sex). In some respects, the spouses or partners can be regarded as

almost synonymous. The assumption is that the strength of their relationship will mean that they co-operate.

However, very often, that is not the case. The Property (Relationships) Act 1976 will mean that, irrespective of the precise control or ownership of the company, the assumption is that it is owned equally. In a sense the law is imposing a shareholders' agreement with equal ownership and control. In order to displace that assumption, an appropriate property relationship agreement will have to be negotiated (with independent legal advice) and signed. For those who have been operating companies before entering into such a relationship, the placing of shares in a trust can be a very useful (but not necessarily infallible) means of avoiding these obligations.

Nonetheless, in any situation where there is more than one shareholder (irrespective of whether the person is also a spouse or partner) a shareholders' agreement should be considered. There are a number of reasons for this recommendation.

Although the Companies Act 1993 is a default, providing many basic rules, it will not prohibit the transfer of shares. Therefore, at a minimum, a constitution will be required to regulate the circumstances in which shares can be transferred by the shareholders ("pre-emptive rights on transfer of shares"). There are number of other reasons why a constitution should be adopted mainly to give the company powers which it can only have if they are contained in a constitution (a few examples are: the acquisition of its own shares and the insurance and indemnification of directors).

But a constitution is a public document filed in the Companies Office. There may be many particular matters that the shareholders wish to provide for privately. The best means of doing this is through a shareholders' agreement or private contract between shareholders.

Someone Else Limited
To take "Someone Else Limited" (where there are two or more shareholders who are not necessarily in a personal relationship) there are many matters which they need to consider and regulate as far as they can. In broad terms, those rules fall into 2 categories.