Every Contract a Limited Company Needs in the UK (2026)

Last updated: February 2025

Legal Requirements for a Limited Company

UK limited companies are governed by the Companies Act 2006 and must file articles of association with Companies House. Under the Employment Rights Act 1996, any employees must receive a written statement of employment particulars on or before their first day. The Companies Act also requires proper documentation of director appointments, share allotments, and significant transactions. UK GDPR compliance requires documented data processing agreements with any third-party processors.

Essential Contracts

Shareholders' Agreement

Governs the relationship between shareholders, covering dividends, share transfers, drag-along and tag-along rights, and deadlock resolution

Director's Service Agreement

Required under the Companies Act 2006 to be available for inspection; defines duties, remuneration, and termination terms for directors

Employment Contract

Legally required under the Employment Rights Act 1996 — must be provided on or before the employee's first day of work

Commercial Terms and Conditions

Standard terms for selling goods or services, incorporating the Consumer Rights Act 2015 and Sale of Goods Act 1979 requirements

Required under UK GDPR — the privacy policy for data subjects and DPAs for any third-party data processors you use

Recommended Contracts

Intellectual Property Assignment

Ensures all IP created by employees and contractors is properly assigned to the company, not the individual creator

Non-Disclosure Agreement

Protects confidential business information when discussing partnerships, investments, or hiring

Loan Agreement

Documents any director loans or third-party lending to or from the company, essential for Corporation Tax compliance

Common Legal Risks for a Limited Company

Shareholder disputes without a shareholders' agreement can lead to costly litigation or company deadlock
IP created by contractors remaining with the contractor if no assignment clause exists
Employment tribunal claims from employees without proper written contracts
Director disqualification for failing to meet Companies Act 2006 obligations
Personal liability for directors if corporate veil is pierced due to poor governance

Industry-Specific Notes

Limited companies should ensure articles of association are tailored beyond the default Model Articles. Companies with multiple directors should also have a board resolution process documented. Annual confirmation statements and accounts filing deadlines must be tracked.

FAQ

What is the most important contract for a UK limited company with multiple shareholders?

A shareholders' agreement is the most critical document. While the articles of association govern basic company operations, a shareholders' agreement covers dividend policy, share transfer restrictions, pre-emption rights, decision-making thresholds, and what happens if shareholders disagree. Without one, you are relying solely on default Companies Act 2006 provisions, which rarely suit the needs of a specific business.

Can a limited company director work without a service agreement?

Technically yes, but it is highly inadvisable. Under Section 228 of the Companies Act 2006, directors' service contracts must be available for shareholder inspection. Without a formal agreement, there is ambiguity about remuneration, notice periods, and restrictive covenants. HMRC may also question payments to directors without documented terms.

Does a single-director limited company still need contracts?

Yes. Even a single-director company needs commercial terms and conditions, a privacy policy under UK GDPR, and employment contracts for any staff. A director's service agreement is also recommended to document salary and dividend arrangements clearly for HMRC. If you plan to take on investors or co-directors later, having a shareholders' agreement framework ready is wise.

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This is guidance, not legal advice. Consult a solicitor for complex matters.

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