Shareholders’ Agreement — What Should It Include?

Articles of association are public and governed by law. A shareholders’ agreement is private and governs the relationship between the owners. It is the most important document when two or more people own a company together.

The 8 Most Important Points

1. Right of first refusal — who has the right to buy if an owner wants to sell.
2. Tag-along and drag-along rights — protect minority and majority shareholders in a sale.
3. Exit in the event of death, illness or divorce — what happens to the shares?
4. Good leaver / bad leaver — the price depends on why someone leaves the company.
5. Deadlock — how to resolve a tied vote (e.g. a shoot-out mechanism or mediation).
6. Non-compete and customer non-solicitation clauses.
7. Valuation method — agreed in advance.
8. Dividend policy and work commitments.

Why It Matters

Most conflicts between business partners arise not at the start, but once the company has value. An agreement drawn up while everyone agrees is far cheaper than a dispute later. Read more about ownership transfers and disputes.

Frequently Asked Questions

Is a shareholders’ agreement legally required?

No, but it is strongly recommended when there are multiple owners.

Can it apply to foreign companies?

Yes, but it must be adapted to the country’s company law — for example, a UK shareholders’ agreement.

Can it be changed later?

Yes, with the consent of all parties.

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