A shareholder agreement is most valuable when business relationships are working well. It creates a shared set of expectations before commercial pressure tests the partnership.
Begin with control, not just ownership
Equal shareholding does not automatically produce equal decision-making efficiency. Founders should discuss which decisions require ordinary approval, which are reserved, and who can act when an urgent matter arises.
Reserved matters often cover new financing, material contracts, borrowing, appointment of directors and a sale of the business. The right list depends on the company’s structure and risk profile.
Plan for disagreement
A deadlock clause should offer a practical sequence: discussion, escalation, mediation and, where appropriate, a defined exit mechanism. An unworkable buyout formula can be almost as problematic as no formula at all.
- Document the governance process and voting thresholds.
- Specify what happens if a founder leaves, dies or becomes unable to participate.
- Address rights of first refusal, valuation and permitted transfers.
- Coordinate the agreement with the company constitution and applicable law.
Protect the business as it changes
Confidentiality, conflicts of interest, intellectual property ownership and future capital calls should not be left to assumption. Agreements also need regular review when the shareholding, financing or management model changes.
This article provides general information and is not legal advice. Applicable law and the right approach depend on the circumstances; please obtain professional advice before acting.