--- title: "Shareholders' Agreement | Pitch" description: "A shareholders' agreement sets out how the owners run the company, who may sell to whom and what happens when they disagree." url: https://www.pitch.law/solutions/shareholders-agreement --- [pitch](https://www.pitch.law/) [Solutions](https://www.pitch.law/solutions) [Corporate and M\&A](https://www.pitch.law/solution-categories/corporate-m-a) # Shareholders' Agreement A shareholders' agreement sets out how the owners run the company, who may sell to whom and what happens when they disagree. We draft it with the articles of association, and make sure the IP stays in the company. ## The question You have co-founders, a first investor or family members in the company, and you want to agree today how decisions are taken, who can leave, who can sell and what happens if the relationship breaks down. Shareholder disputes usually concern something nobody wrote down: a founder who stops working but keeps all his shares, an offer that one shareholder wants to accept and the others do not, or a new round that dilutes the team. A shareholders' agreement is the contract in which the owners settle these points. You usually need one as soon as there are two or more shareholders with different roles or different money at stake: founders who each contribute differently, a business angel or fund coming in, a family company with a next generation, or a joint venture between two companies. See [funding rounds and term sheets](https://www.pitch.law/academy/startup-funding-rounds) for how it fits into a financing. Company law is largely national in the EU, so the details depend on the country where the company is incorporated. The basic split is similar in many countries: the agreement works alongside the articles of association. The articles are filed in a public register, and bind the company and third parties. The shareholders' agreement is a private contract that binds only its signatories, stays confidential and is easier to change. What goes where is the first decision. Rules that must be enforceable against the company or a future buyer, such as approval clauses, belong in the articles too. Rules about the relationship between the owners, such as leaver terms and non-compete, belong in the agreement. ## Our approach We start with who contributes money, work and IP, and what the next round may look like. We draft both documents as a set, so they do not contradict each other. If you have not yet set up the company, we do this together with the [incorporation](https://www.pitch.law/solutions/incorporation); if an investor is coming in, together with the [funding round](https://www.pitch.law/solutions/funding). The agreement covers: - **Governance.** Board composition and nomination rights, decisions reserved for shareholders or for a qualified majority (budget, new shares, borrowing, selling key assets, changing the business), and information rights for minority holders. - **Transfers.** Lock-up for an initial period, pre-emption rights, approval clauses, drag-along and tag-along. National company law sets limits, and they differ per country. Most countries allow transfer restrictions in the articles or the agreement, but not in a way that locks a shareholder in without a fair exit. We check what applies to your company form and country. - **Vesting and leavers.** Founder shares that vest over time, and a good leaver and bad leaver regime that sets the price when someone leaves. The price must stay proportionate and balanced. - **Deadlock.** A way out when two equal shareholders cannot agree: escalation, mediation, a buy-sell mechanism or, as a last resort, a sale. - **Non-compete and confidentiality.** Restrictions on founders that are limited in scope, time and territory. - **IP and founders' contributions.** Everything the founders created for the business is assigned to the company, in writing, so that the company, and not an individual founder, owns the code, designs, brands and inventions that investors will pay for. Gaps in the chain of title are a common finding in later due diligence, see [finding the IP you already have](https://www.pitch.law/academy/hidden-intellectual-property-audit), [protecting software](https://www.pitch.law/academy/protecting-software-intellectual-property) and [M\&A](https://www.pitch.law/academy/mergers-acquisitions-overview). - **Later rounds.** Anti-dilution protection, pre-emption on new issues and what happens to the agreement when new investors join. - **Disputes.** Governing law, and a choice between courts, mediation and arbitration. Our [Document Studio](https://www.pitch.law/technologies/contract-studio) produces the first draft in the firm's house style from our clause library, in Word, with party details taken from company registers such as the national company registers. When an investor sends its own draft, our [contract review](https://www.pitch.law/technologies/clause-library-risk-review) reads it clause by clause against our playbook and ranks the issues, and a lawyer checks every finding before we advise you. After signature, the [rights and obligations register](https://www.pitch.law/technologies/contract-obligations) can follow dates such as lock-up periods, notice periods and option windows, once a person has confirmed them. ## What you get - A shareholders' agreement tailored to your situation, with matching articles of association. - A clear overview of what is in the articles and what stays private. - Negotiation of the investor's draft, with a ranked list of issues and proposed redlines. - Founders' IP assignments, so that the company owns what it uses. Take two founders who each own half of a software company, with a first investor about to join. We set up vesting so that one founder leaving after a year does not keep half the company, add a deadlock procedure, and have both assign existing code and the brand to the company. When the investor's draft arrives with reserved matters that cover day-to-day decisions, our review flags them, and we propose a shorter list. ## Next step Tell us who the shareholders are, what each contributes and whether a financing is coming. We will propose how to split the articles and the agreement, and what to negotiate first. [Schedule a meeting](https://www.pitch.law/schedule) or [contact us](https://www.pitch.law/contact-us). ## In short - Split between the articles of association and the shareholders' agreement - Governance, reserved matters and board composition - Transfer restrictions, drag-along and tag-along within the limits of national company law - Vesting, good and bad leaver, non-compete and confidentiality for founders - IP contributed to the company and anti-dilution for later rounds ## Technology we use - [Technology](https://www.pitch.law/technologies/contract-studio) ### [Document Studio](https://www.pitch.law/technologies/contract-studio) [Our Document Studio drafts and analyses legal documents in a secure, on-premise environment, and keeps the documents behind your matters up to date as new data comes in and procedural steps fall due.](https://www.pitch.law/technologies/contract-studio) - [Technology](https://www.pitch.law/technologies/clause-library-risk-review) ### [Contract Review](https://www.pitch.law/technologies/clause-library-risk-review) [Send us the contract the other side drafted and we check it clause by clause against our playbook, with a risk ranking an attorney has verified.](https://www.pitch.law/technologies/clause-library-risk-review) - [Technology](https://www.pitch.law/technologies/contract-obligations) ### [Contract Management: Rights and Obligations](https://www.pitch.law/technologies/contract-obligations) [Once a contract is final, we pull out each party's duties and rights with the clause they come from, have a person confirm them, and follow them with reminders.](https://www.pitch.law/technologies/contract-obligations) ## Background reading - [Academy](https://www.pitch.law/academy/startup-funding-rounds) ### [Funding Rounds: Term Sheets and Investment Agreements](https://www.pitch.law/academy/startup-funding-rounds) [How an equity round for a company in the EU works, the term sheet, what each clause does, the investment and shareholders' agreements, and what investors check first.](https://www.pitch.law/academy/startup-funding-rounds) - [Academy](https://www.pitch.law/academy/hidden-intellectual-property-audit) ### [Finding the IP You Already Have](https://www.pitch.law/academy/hidden-intellectual-property-audit) [Most companies own more intellectual property than they have registered. This article explains which rights arise without registration, how an IP audit finds them, and why ownership matters.](https://www.pitch.law/academy/hidden-intellectual-property-audit) - [Academy](https://www.pitch.law/academy/protecting-software-intellectual-property) ### [Can I Protect My Software?](https://www.pitch.law/academy/protecting-software-intellectual-property) [Software is protected by copyright, sometimes by patent, and by trade secret law. This article explains what each protects, who owns the code, and how the rights combine.](https://www.pitch.law/academy/protecting-software-intellectual-property) - [Academy](https://www.pitch.law/academy/mergers-acquisitions-overview) ### [M\&A for Growing Businesses](https://www.pitch.law/academy/mergers-acquisitions-overview) [A practical walk through an M\&A deal, share or asset deal, price mechanisms, warranties, change of control and getting from signing to closing.](https://www.pitch.law/academy/mergers-acquisitions-overview) ## More in Corporate and M\&A - ### [Incorporate a Company in Belgium](https://www.pitch.law/solutions/incorporation) [Setting up a Belgian company means choosing the right form, a sound financial plan, articles and a shareholders' agreement, and making sure the company owns the IP behind the business. We prepare everything and work with your notary.](https://www.pitch.law/solutions/incorporation) - ### [M\&A and Due Diligence](https://www.pitch.law/solutions/m-a-due-diligence) [Buying, selling or merging a business needs a structure, a review of what is being transferred and a contract that allocates the risks. We lead the legal side from preparation to closing.](https://www.pitch.law/solutions/m-a-due-diligence) - ### [Management Agreement](https://www.pitch.law/solutions/management-agreement) [A director or manager who works through a management company or as a self-employed person needs an agreement that holds up as a mandate and not as employment. We draft it around the law that applies, the company's IP and a clean exit.](https://www.pitch.law/solutions/management-agreement) - ### [Valuation](https://www.pitch.law/solutions/valuation) [A price for a company or its IP is only as good as the rights behind it. We supply the legal, IP and tax input that makes a valuation stand, whether it serves a funding round, a contribution in kind, a transfer or an exit.](https://www.pitch.law/solutions/valuation) - ### [Funding](https://www.pitch.law/solutions/funding) [Raising capital means getting the company, its IP and its documents ready for investors, then negotiating the deal. We prepare you for the round and carry the legal work through to closing.](https://www.pitch.law/solutions/funding) ## Let’s talk Tell us what you’re working on. We’ll get the right person on it and reply within one business day. The first chat is free. [Schedule a meeting](https://www.pitch.law/schedule)