Startup Company Shareholder Agreement

A shareholder pact can restrict the ability of an outgoing shareholder to create a competing company, which would be invaluable to protecting the interests of your start-up and is essential to maintaining the value of the company. Particular attention should also be paid to the voting rights of shareholders, who are also directors. In particular, the terms of the shareholders` pact do not give additional voting power that was not foreseen, since they are both directors and shareholders. The main objective of a shareholders` pact is to protect shareholders and the company. A shareholder pact is one of the most important legal documents you enter when you start your startup and, as with any important legal document, you should make sure it meets your needs and is tailored to your startup. Of course, the new shareholder will have the opportunity to negotiate the shareholder contract with you. The willingness of start-up founders to negotiate will of course depend heavily on what the new shareholder puts on the table. For example, an investor may have more bargaining power than an employee. In the start-up phase, the shareholders` pact will be used primarily to address the fundamental issues relating to the relationship between the founders, starting with their participations, contributions, commitments and roles, commitment to the company, vesting rules, etc. A shareholders` pact could include a mechanism requiring a shareholder to sell its shares to either the remaining shareholders and/or the company before they are sold to outside third parties. For co-founders, it is essential to agree on how their start-up is managed.

If this mutually agreed buy-in did not emerge at the beginning of the company, some shareholders may suggest that they made a bad deal. I have seen that this is manifested by a total collapse of relations and businesses. Although directors are responsible for the day-to-day management of a company`s affairs, the shareholders` pact may give shareholders the right to approve certain decisions that they feel are not left to the discretion of directors (for example. B, a global pivot of the company`s activity, changes to the company`s statutes, etc.). Operating a start-up with company building and interchangeable rules does not often make it easy, as most start-up founders want their business to be governed. It is important to note that, in a duly developed shareholder pact, minority shareholders receive less for their shares than majority shareholders. If the founders trust each other and hold shares together sufficient to meet these fundamental thresholds, they can probably limit their shareholders` pact to a few key elements.