Agreement for formation of limited company for purpose of a new venture1 THIS AGREEMENT is made the day of BETWEEN:

N: (1) AB (first promoter) of (address) and (2) CD (second promoter) of (address) (the Parties) [231] WHEREAS the Parties have agreed to form a company for the purpose of carrying on business as NOW IT IS AGREED as follows:

1
AB2

Formation and capital of company

shall procure the incorporation of a company (the Company) limited by shares under the Companies Act 1985 and having an authorised share capital of divided into [ordinary] shares of each

Name

The Company shall be called Ltd if such name is available for registration or by such other available name as may be agreed between the Parties [or in default of such agreement as (name of one of the Parties) shall select] [232]

3
3.1 3.2 [233]

Memorandum and articles of association

The memorandum and articles of association of the company shall be in the form of the attached proof marked [A] with such modifications as the Parties may agree in writing The memorandum and articles of association shall be subscribed by the Parties or their respective nominees each of whom shall agree in the memorandum to take up one3 [ordinary] share of in the capital of the Company

4
[4.1

Directors
Each of the Parties will exercise his voting rights for the time being in the Company against any resolution for the removal of the other party to this agreement from his office of director of the Company [and in favour of any resolution for the re-appointment as a director of such other party retiring by rotation as a director of the Company]4 prior to (date)5 or at any time after that while such other party [and his close relatives [and any trustee[s] of a family settlement made by him]] [holds or hold between them] [[ordinary] shares or stock in the capital of the Company having an aggregate nominal value of not less than or not less than per cent in nominal value of the issued [ordinary] share capital of the Company]6 For the purpose of this clause a person shall be deemed to be a close relative of one of the Parties only if he or she is the spouse [parent, brother or sister (whether of the whole or half blood)] or the child, adopted child, step-child or grandchild of the party in question [or of any such brother or sister]7 [and a person shall be deemed to be a trustee of a family settlement made by one of the Parties only if such person is the sole trustee or one of the trustees of a trust under which no person other than the party in question his spouse, parent [and] issue (including issue not yet born) [brother or sister (whether of the whole or half blood) and the issue (including issue not yet born) of any such brother or sister] is entitled to any beneficial interest]] So long as either of the Parties is entitled to be a director of the Company each of the Parties will exercise his voting rights for the time being in the Company and take such other steps as lie within his power to procure that the maximum number of directors of the Company shall not exceed (number)8

[4.2

4.3 [234] or 4.1 4.2

The Parties will procure that they or their respective nominees are appointed the sole first directors of the Company9 Each of the Parties will exercise his voting rights for the time being in the Company and take such other steps as lie within his power to procure 4.2.1 that each of the Parties or his nominee will remain a director of the Company until (date)10 and so long after that as he or the party nominating him holds beneficially [[ordinary] shares or stock in the capital of the Company having an aggregate nominal value of not less than or not less than per cent in nominal value of the issued share capital of the Company]11 [4.2.2 that (name) shall be chairman of the Company until (date) and so long after that as he remains a director of the Company] [4.2.3 that so long as either of the Parties or his nominee is entitled to remain a director of the Company in accordance with the provisions of this clause the maximum number of directors of the Company shall not exceed (number)]]12

[235]

5
5.1

Share applications
Each of the Parties will within days of incorporation of the Company make an unconditional application in writing to the Company for the allotment to him for cash at par of [ordinary] shares of each in the capital of the Company upon terms that such shares shall be payable [in full or as to [pence] per share] upon allotment and neither party will withdraw any application so made Each of the Parties will take such steps as lie within his power to procure that the Company makes simultaneous allotments of the shares so applied for

5.2 [236]

Loans13

[Each of the Parties will on (date) or on such later date as they may agree in writing advance to the Company the sum of upon terms that the Company will issue to the maker of each advance upon receipt or in any event within days of the making of the advance a debenture in the form of the annexed draft marked [B] with any modifications as they may agree in writing14 or 6.1 Each of the Parties will on (date) or on such later date as they may agree in writing advance to the Company the sum of upon terms that [each advance will be free of interest or the amount of each advance for the time being outstanding will bear interest at the rate of [% per year or % above the base rate of (name) Bank plc for the time being with a minimum rate of % per year] such interest to be calculated on a day to day basis and to be payable by [half] yearly instalments on (date) [and (date)] in each year [provided that no interest will accrue in respect of any period prior to (date)]] Each advance will be repaid on (date) or upon the earlier happening of any of the following events: 6.2.1 the service on the Company of a notice signed by both Parties requesting immediate repayment 6.2.2 the passing of a resolution or the making of an order for the winding up of the Company 6.2.3 the appointment of a receiver of all or any of the assets of the Company 6.2.4 the Company committing an act of insolvency or being unable to pay its debts as and when due [6.2.5 the Company being in arrear for more than [days] in the payment of interest due on any advance made to it pursuant to this agreement] The Company will be entitled to repay the whole or any part of such advances at any time provided that (unless the Parties otherwise agree in writing) every repayment shall be divided between the Parties rateably according to the respective amounts of their advances under this agreement for the time being outstanding The advances will be unsecured and so long as any part of them is outstanding the Company will not without the written consent of the Parties create or agree to create or suffer to exist any mortgage charge or other incumbrance over any of its assets]]

6.2

6.3 [6.4 [237]

[7

Additional clauses

(insert any suitable additional clauses: see Form 12 [300] et seq post. For a clause for inclusion if the parties are to have service agreements as directors see Form 7 clause 5 [253] post)]

Costs and expenses

Each of the Parties will take such steps as lie within his power to procure that the Company reimburses AB in respect of all reasonable costs and expenses incurred by him in connection with the formation of the Company [and that the Company reimburses AB and CD in respect of all reasonable costs and expenses incurred by them respectively in connection with the preparation of this agreement] AS WITNESS etc (signatures of (or on behalf of) the parties) [238]