Guide · EasyCofounder
Shareholders’ agreement: the essentials for co-founders
Between co-founders, verbal rules work as long as everything is going well. A shareholders’ agreement exists precisely for the difficult moments. This guide covers the essentials so you can prepare the discussion with your partners and your adviser. It is not legal advice.
Updated on 6 min readBy the EasyCofounder team
In short
A shareholders’ agreement (often called a founders’ agreement at the earliest stage) is a contract signed between partners, alongside the company’s articles of association, to organise their relationship: governance, partners joining and leaving, what happens to shares when someone leaves, non-compete and intellectual property. It is usually confidential and is best drafted with a lawyer, ideally when the partners commit to working together.
Contents
- What is a shareholders’ agreement?
- What is the difference between the articles of association and a shareholders’ agreement?
- Which clauses are common between co-founders?
- When should you sign a shareholders’ agreement?
- How should you prepare the discussion between partners?
- What happens without a shareholders’ agreement?
- Which questions should you ask your lawyer?
- Frequently asked questions
- Glossary
- About this guide
What is a shareholders’ agreement?
A shareholders’ agreement is a contract between some or all of a company’s shareholders. It complements the articles of association by setting out the rules that govern their relationship and their mutual commitments. Depending on the country and company form, a similar document may go by another name, such as an operating agreement for a US LLC.
It is not mandatory, but it is very common in startups, especially as soon as there are several co-founders or investors come in.
The agreement is a preventive tool: it is less about “protecting yourself” from the other partners than about checking, before you commit, that everyone understands the rules in the same way. Drafting it together often reveals different expectations about pay, time spent on the project or selling the company.
What is the difference between the articles of association and a shareholders’ agreement?
| Articles of association | Shareholders’ agreement | |
|---|---|---|
| Nature | Required to set up the company | Optional |
| Visibility | In many countries, filed with the company registry and publicly available | Usually confidential |
| Content | Rules on how the company operates | More detailed commitments between partners |
| Signatories | All shareholders are bound | The shareholders who sign up to it |
Which clauses are common between co-founders?
The content varies with each project. These are the topics most often covered in startups:
Governance and decisions
Who decides what, which decisions require unanimous or majority approval, and how deadlocks are resolved.
A partner leaving
What happens to the shares of a co-founder who leaves, depending on the circumstances (often called “good leaver” or “bad leaver”), and how this links to any vesting mechanism.
New partners joining
Pre-emption rights for existing partners, and rules for funding rounds or share transfers.
Partners’ commitments
Exclusivity, non-compete, confidentiality, time devoted to the project.
Intellectual property
Assignment to the company of the code, trademarks, content and inventions created by the co-founders.
Exit and sale
The rules that apply if an acquisition offer comes in, for example drag-along and tag-along rights.
When should you sign a shareholders’ agreement?
As soon as possible after deciding to partner: when the company is set up or when a new co-founder joins. The longer you wait, the more positions harden and the trickier the discussion becomes.
- 1List together the topics to cover (roles, decisions, departures, intellectual property).
- 2Discuss the answers among partners, without lawyers, to agree on the spirit.
- 3Have a lawyer turn these agreements into clauses suited to your company.
- 4Review, ask every question you have, then sign.
- 5Update the agreement at major milestones (new partner, funding round).
How should you prepare the discussion between partners?
- Everyone has stated their expectations: role, pay, ambition, time available.
- The decisions that require everyone’s agreement have been identified.
- The case of a partner leaving has been discussed calmly.
- Ownership of the code, trademarks and content has been clarified.
- A legal professional has been chosen to draft the agreement.
Three co-founders set aside half a day to answer a list of questions together, in writing: what happens if one of us wants to leave in a year? If we receive an acquisition offer? If we disagree about raising funds? They then go to their lawyer with shared positions, which makes drafting simpler.
What happens without a shareholders’ agreement?
Without an agreement, only the articles of association and the general rules of company law apply. Many common startup situations may then not be covered:
- A co-founder leaves early but keeps all their shares.
- Two equal partners cannot agree on an important decision.
- The code or the brand was created by a partner without a clear assignment to the company.
- An acquisition offer divides the partners, with no rule for deciding.
Settling these situations after the fact, once relationships have become strained, is generally slower, more expensive and riskier for the company than planning for them from the start.
Which questions should you ask your lawyer?
Coming with specific questions makes the advice more effective:
- How should the agreement fit with our company’s articles of association?
- How can we set up vesting between us?
- What rules should apply if a partner leaves, depending on the circumstances?
- How do we secure intellectual property created before the company was formed?
- What will need to change at a future funding round?
To prepare the equity question: splitting equity between co-founders. To find your partners: how to find a co-founder.
Frequently asked questions
Is a shareholders’ agreement mandatory?
No, it is optional. It is nevertheless very common in startups because it settles in advance situations that the articles of association do not cover in detail.
Is a shareholders’ agreement public?
Generally not: unlike the articles of association, which are filed with the registry in many countries, the agreement usually remains confidential between its signatories.
Can I draft a shareholders’ agreement without a lawyer?
Templates exist, but a poorly drafted agreement may be ineffective or contradict the articles of association. It is strongly recommended to have it drafted or reviewed by a lawyer in your jurisdiction.
When should the shareholders’ agreement be amended?
At major milestones in the company’s life: a partner joining or leaving, a funding round, a change in organisation. Amendments generally require the signatories’ agreement.
Who should sign the shareholders’ agreement?
In principle, the shareholders who wish to be bound by its rules. In a startup, all co-founders commonly sign it, and investors sign up to it when they come in.
Can a shareholders’ agreement protect a minority co-founder?
Yes, it can provide for example information rights, decisions that require their consent or fair exit terms. The exact content depends on negotiations between partners and should be drafted with a lawyer.
Glossary
- Shareholders’ agreement
- A contract between shareholders that complements the articles of association and organises their relationship.
- Articles of association
- The company’s constitutional document, which sets out its operating rules (called bylaws or a certificate of incorporation in some countries).
- Good leaver / bad leaver
- The distinction between an “acceptable” and a “faulty” departure of a partner, with different consequences for their shares.
Find my future partners
Meet co-founders before you sign anything
Further reading
- Equity splitSplitting equity between co-founders: criteria, worked reasoning, vesting, cliff and common mistakes. Pointers to start the conversation on the right foot.
- Find a co-founderHow to find a co-founder for your startup: CTO, CEO and COO profiles, where to look, how to choose, equity and the mistakes to avoid.
- Find a business partnerEntrepreneur looking for a business partner? Clarify what you need, where to look, how to choose a partner and how to secure the partnership.
About this guide
This guide was written by the EasyCofounder team — a platform that connects founders, talents and startups (a service by IRPEA) — and was last updated on November 4, 2026. It draws on common startup practice and on the questions our members ask.
It provides general guidance and is not legal, tax or financial advice. For your own situation, consult a qualified professional (lawyer, accountant) and the official resources available in your country.