Checklist for Pricing Vested Shares on a Good-Leaver Exit versus a Bad-Leaver Forfeiture

Price vested shares on one leaver clause before anyone signs a UK private-company shareholders' agreement. Name the good exits and the bad exits. Do not treat an undefined value phrase as the price. England and Wales has no statutory list of leavers, so the price is what this clause and the articles set. Name the date and the valuer.

An undefined “fair market value” is not a figure you can pay. The usual mistake is to let a chat message fill the gaps: every resignation is a bad leaver, the board will pick the label later, the agreement forces the company to buy, and the personal guarantee ends with the shares.

Disclaimer: Checkory provides AI support, not legal advice. Consult a qualified lawyer for binding decisions.

Which exits have to be named before the price is fixed?

Write each good exit and each bad exit by name. A catch-all of anyone who is not a good leaver is not the bad-leaver test. The Companies Act 2006 has no such list, so a resignation the clause does not name is not a forfeiture.

Russell-Cooke’s undated note treats retirement, death or permanent disability, redundancy, or termination without fault as the usual good-leaver exits (Russell-Cooke’s leaver note). Caesar’s note of 2 October 2026 says that defining every resignation as a bad leaver invites a challenge (Caesar’s vesting guidance). DWF’s note of 26 May 2026 treats the usual bad-leaver exits as resignation inside a minimum period, fraud, or gross misconduct (DWF’s May 2026 note). Delete the catch-all.

What price applies when the departure is neither good nor bad?

Mixed facts need a middle category with its own price. Choosing the label at the signing meeting does not set the price. A later label is allowed only on grounds the clause already states.

Russell-Cooke’s example is a resignation after long service, with four-year vesting and a one-year cliff, paid at partial market value. DWF’s note of 31 May 2024 describes a negotiated figure of the issue price or £1 in aggregate, as set out in DWF’s May 2024 note. Do not copy that £1 into a clause that never states it. In Ajayi v Ebury Partners Ltd, Gowling’s note of 16 March 2020 reads “terminates his consultancy” as the consultant ending a fixed term of nearly three years, not as expiry of the term. Failing to instruct the expert was a breach, in Gowling’s note on Ajayi. Write that middle category and its price.

What has to be stated with a good leaver’s vested price?

Price those vested shares on one basis the document names. State the valuation date, who values, who pays, and whether a minority discount applies. If the draft says fair market value and nothing else, the price is not yet written.

Optival’s undated note treats fair value as a proportionate share of the whole, usually with no minority discount, and market value as the price of that block, so both discounts apply. The bases commonly differ by 30% to 50%. The valuer does not choose the basis, as explained in Optival’s fair-value note. Its example, not this company’s accounts, prices a 22% holding at £1,056,000 fair value, £554,400 after discounts of 30% and 25%, and £50,000 at the lower of subscription price and market value. Expert or arbitrator is a separate question, as the expert-determination guide explains.

What price applies to shares that have not vested?

A bad leaver’s vested shares take one stated price. Unvested shares take another, including a good leaver’s unvested shares. Nominal value is the amount stated for that share. Issued shares still pass by a transfer, a buy-back, or a conversion.

Caesar’s note transfers unvested shares for a nominal sum and vested bad-leaver shares at the lower of cost and fair value. DWF’s note of 26 May 2026 transfers unvested shares at nil or minimal value, whatever the leaver category, often over two to five years. Sprintlaw UK’s note of 20 September 2025 warns of a litigation risk in a forced sale at £1 for a minor mistake. That warning is the firm’s, not Ajayi’s, in Sprintlaw UK’s bad-leaver note. State the vested basis, then the unvested price.

When does the transfer bind the company?

The shareholders’ agreement binds its signatories. The articles of association, which are the company’s constitution, have to carry the same trigger, price, and buyer, or you are left with a claim rather than a transfer. Model articles for a private company limited by shares do not provide for a leaver transfer.

Section 33(1) binds the company and its members to the constitution as if they had promised to observe it. The wording is in section 33. Caesar’s note of 2 October 2026 says that without the articles the agreement is only a claim. Add a power of attorney so a director can sign the transfer, and stop votes and dividends from the trigger date. If the company buys, section 690 allows the purchase subject to that Chapter and the articles, but not if only redeemable or treasury shares would remain. Section 694 requires the off-market contract to be approved before the purchase.

If nobody can pay, record who holds the shares. In Ajayi there was no duty to find a buyer, and the consultant recovered no loss.

What do you record for the guarantee before you rewrite or walk?

The share price does not release a personal guarantee. Record each one as released at completion, or indemnified until the lender releases it. Once that is recorded, rewrite the clause and the articles, or walk. The agreement alone is not the transfer.

Alex Solo’s New Zealand note of 2 June 2026 says a buy-out price does not release a landlord guarantee. The note describes New Zealand practice, not section 690, as Sprintlaw’s New Zealand buy-out note explains. A personal guarantee is a separate promise, as the personal-guarantee guide explains. Upload both documents at /document-analysis. That upload is not the signature.