What is a Shareholder Agreement?

A shareholder agreement is an agreement between a company’s owners that sets out the rights and obligations of the company’s owners.

A shareholder agreement will generally set forth:

  1. How and when a shareholder can sell his/her shares.
  2. What decisions require unanimous consent of the shareholders.
  3. Can a shareholder start another business that competes with the company?
  4. How and when the company can borrow money from the shareholders.
  5. How disputes will be resolved.

The process of negotiating a shareholder agreement enables you to have a frank discussion about real-life topics that might only come up if there is a dispute. It is better to have those discussions at the outset of the company’s formation to be sure that you and your partners genuinely see eye to eye.

Get your Shareholder Agreement here.

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