Shareholder arrangements and deeds: have you checked if one conflicts with the other?

read time: 3 mins

A recent case in the High Court highlights the importance of assessing potential conflict between arrangements in shareholders’ agreements and the construction of terms in any separate deed made by the parties. Such conflict can prevent the terms of a shareholders’ agreement being enforceable and result in a very different outcome for all involved.


Ernesto (“E”) and Josephine (“J”) Colicci married in the 1980s and over time created a successful catering business operating several establishments in London under the company name ECSI Limited (the “Company”).  E and J entered into a shareholders’ agreement (“SHA”) in 2011, but subsequently divorced the same year and E married the defendant, Nora Grinberg, in 2014. A deed was entered into in 2016 by E and J (“2016 Deed”) which covenanted that any shares in the Company that were still held by E and J on their death would pass to their two adult children (“Children”). In 2017, a new SHA was entered into and E and J’s Children became shareholders in the Company, without Nora’s knowledge. Later in 2017, E made a will that bequeathed his shares to Nora. J and the Children were unaware of the will.

E unexpectedly died in January 2021 and J and the Children brought a claim to enforce the 2016 Deed which left all shares in the Company to the Children, arguing that the new SHA entered into in 2017 did not affect the validity of the 2016 Deed. Nora contested such claim and argued that the 2016 Deed was revoked by clause 18 of the 2017 SHA. The High Court ultimately agreed with J and the Children and the shares of the Company were inherited by the Children.

Issues and Analysis

Clause 18 of the 2017 SHA (which was identical to the wording in the 2011 SHA save for the words after the final comma) stated:

“18.1 This Agreement, and any documents referred to in it, constitute the whole agreement between the parties and supersede any arrangements, understanding or previous agreement between them relating to the subject matter they cover, including the Shareholders Agreement…dated 8 December 2011.”

The High Court held that clause 18 of the 2017 SHA did not revoke the 2016 Deed, which created testamentary obligations on E and J removing their freedom to dispose of their shares on death, thus the shares in the Company were inherited by the Children. The subject matter of the 2017 SHA was different from the 2016 Deed as it only concerned the rights and obligations of the parties as shareholders. The central purpose of the 2017 SHA was to change the 2011 SHA to introduce new shareholders and a director into the Company. Had the 2017 SHA intended to revoke the 2016 Deed, it would have been stated as such within the body of the agreement, as “it is inconceivable that the parties would mention one revoked agreement without mentioning another of comparable importance.”

Key takeaways

In the same way that in-house lawyers provide tailored and commercial advice to their colleagues and business, it is pertinent to ensure when drafting or reviewing agreements, that the mechanics are carefully considered in light of any potential adverse impact on the intentions of the parties.

When dealing with shareholder matters and drafting or reviewing a shareholders’ agreement, it is important to consider the terms of the shareholders’ agreement and their interrelation with other agreements. Some of the key provisions to review are:

  • pre-emption rights and who should have the right of first refusal prior to the transfer of shares to a third party;
  • the triggers in any compulsory transfer mechanics and who the shares are transferred to on a trigger such as death; and
  • the wording of the entire agreement clause and which documents should prevail and/or be superseded (this can be applied as a concept to many other commercial arrangements as well).

For more information, please contact Brendan Biggs.

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