11 Things to Include in a Shareholders Agreement

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 4,787 reviews

Jump to Section

Need help with a Shareholders Agreement?

Post Project Now

A shareholders agreement is a legally binding contract between shareholders of a company. This contract helps establish a fair relationship between shareholders and outlines how decisions will be made and how the company will run under shareholders’ governance.

In any shareholders agreement, there must be rights and obligations to protect individual and company interests during a dispute, litigation, or warranty breaches.

This guide explores 11 things to include in a shareholders agreement and how one oversees how shares are sold, outlines regulations, and protects the interests of individual shareholders who help run a corporation.

1. The Name of the Company and All the Shareholders

As with any business contract, you should begin a shareholder agreement by stating the name of the company and each shareholder.

You should include the following information for each shareholder:

  • Each’s legal first and last name
  • Each’s address
  • Each’s phone number

You can also use this space to identify officers of your business and appoint a managing shareholder.

Here is an article about shareholder agreements and what they involve.

2. Director Structure

Specify the board of directors and managers involved in the company's operations. Directors in an organization include:

  • The Chief Executive Officer (CEO)
  • The Chief Financial Officer (CFO)
  • The Chief Operations Officer (COO)

The shareholder structure will vary by company. For example, small businesses and startups may only have shareholders as the board of directors.

The structure of your shareholder board will directly influence things such as:

  • The day-to-day operations
  • Large-scale decisions
  • Individual voting rights among the shareholders

Make sure that your shareholders’ voting rights are explained regarding the percentage of the company they own.

Here is an article with more information on shareholder structure.

3. The Goals of the Agreement

The agreement's goals will likely cover many things, including voting rights, rules shareholders must follow, how decisions will be made, how the company runs, and what to do if a shareholder breaches the agreement. It should also lay the groundwork to establish a fair relationship between all parties.

Your objectives in your shareholder agreement may require addendums, such as a share repurchase agreement, shareholder loan agreement, and shares transfer agreement.

Identify the agreement's goals, then organize your contract to reflect each one accordingly.

Here is an article that provides a shareholders agreement template.

Meet some lawyers on our platform

Valerie L.

35 projects on CC
View Profile

Bryan B.

117 projects on CC
View Profile

Bruce B.

24 projects on CC
View Profile

Faryal A.

6 projects on CC
View Profile

4. How Shares Will Be Bought, Sold, or Transferred

The shareholder agreement can regulate how shareholders and the company can handle shares. This includes:

  • How they can buy shares or equity
  • How they can sell shares or equity
  • How they can transfer shares or equity among themselves or to outside buyers

It is also important to describe how shares will be transferred or sold if a shareholder dies or divorces. For example, a provision in place may allow other shareholders to buy or inherit the previous shares before making them available to outside investors.

Here is an article about the transfer of shares.

5. Protections for Shareholders

This portion of the document allows shareholders to establish boundaries and guidelines that protect their own interests. For example, a clause may prohibit other shareholders from selling or transferring their shares without first allowing the other shareholders to purchase them for a set dollar amount.

There may also be restrictions on who can buy or inherit company shares. This can prevent losses or conflict later. For example, a family-owned business may want to prevent shareholders from selling portions of the company to third parties.

6. Dividends

Dividends are the amount of money shareholders are entitled to based on the value of their owned shares. The board of directors calculates the exact dividend amount. These are then given to shareholders on a routine basis.

Some companies do not pay dividends but instead retain earnings that they invest back into the company.

Whether or not investors receive dividends will depend on the content of the shareholders agreement. Some dividends may even be issued as shares of stock.

Here is an article with more information on dividends.

7. Price of Shares

The shareholder agreement should clearly express the price of shares. This is often written as price-per-share.

The share price reflects the market value of each share divided by the total number of shares. So, each share price represents a fraction of the entire asset value.

This part of the agreement can also require shareholders to sell their shares for the minimum net asset value. This prevents them from selling their shares at a low rate, resulting in a loss for the company and other shareholders.

Here is an article on setting prices for shares.

8. Company Operations

The shareholders agreement can also cover factors relating to everyday operations. Most shareholders have a large say in how the company runs. To protect its interests, the company may limit shareholders' rights when it comes to influencing or directing company operations.

Shareholders’ vision for the company tends to be profit-focused and more short-term. This is important to recognize as you draw up your shareholder agreement.

You can set a certain level of commitment required from shareholders to ensure they invest more than just money into your company’s growth.

Here is an article that overviews different shareholder roles and responsibilities.

9. Restrictions and Regulations

Shareholders have certain rights by owning a portion of a company. These include:

  • Voting rights
  • Ownership rights
  • The right to transfer and sell assets
  • A right to collect dividends
  • The right to sue for breach of contract or illegal activity

This provision often overviews what processes shareholders must take and what actions they do not have a right to make on behalf of the board or company.

Here is an article that looks more closely at common shareholder agreement clauses.

10. Dispute Resolution Procedures

A dispute can arise for a number of reasons among shareholders. From a direct breach of contract to disagreements over company operations, it is important to have a dispute resolution procedure in place, so you know how to manage conflict internally.

A dispute resolution agreement offers a structure on how the board of shareholders can handle disputes when they arise. Before signing, all parties must agree upon the steps and methods outlined in this agreement.

Here is an article that provides strategies for managing and resolving shareholder disputes.

11. Signature of All Parties

Finally, all parties involved must sign and date the contract to make it legally binding and enforceable.

Shareholders should sign alongside any business officers and affiliates.

Post a project in ContractsCounsel’s marketplace to receive flat fee bids from lawyers for your project. All lawyers have been vetted by our team and peer-reviewed by our customers for you to explore before hiring.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Lawyers

Keidi C. on ContractsCounsel
View Keidi
5.0 (8)
Member Since:
August 25, 2021

Keidi C.

Principal Attorney
Free Consultation
Boston, MA
25 Yrs Experience
Licensed in MA, NY
New England Law | Boston

Keidi S. Carrington brings a wealth of legal knowledge and business experience in the financial services area with a particular focus on investment management. She is a former securities examiner at the United States Securities & Exchange Commission (SEC) and Associate Counsel at State Street Bank & Trust and has consulted for various investment houses and private investment entities. Her work has included developing a mutual fund that invested in equity securities of listed real estate investment trusts (REITs) and other listed real estate companies; establishing private equity and hedge funds that help clients raise capital by preparing offering materials, negotiating with prospective investors, preparing partnership and LLC operating agreements and advising on and documenting management arrangements; advising on the establishment of Initial Coin Offerings (ICOs/Token Offerings) and counseling SEC registered and state investment advisers regarding organizational structure and compliance. Ms. Carrington is a graduate of Johns Hopkins University with a B.A. in International Relations. She earned her Juris Doctorate from New England Law | Boston and her LL.M. in Banking and Financial Law from Boston University School of Law. She is admitted to practice in Massachusetts and New York. Currently, her practice focuses on assisting investors, start-ups, small and mid-size businesses with their legal needs in the areas of corporate and securities law.

Michael O. on ContractsCounsel
View Michael
5.0 (4)
Member Since:
February 14, 2022

Michael O.

Managing Attorney
Free Consultation
Los Angeles
16 Yrs Experience
Licensed in CA, NY
University of Southern California

A corporate and commercial attorney with experience in transactional legal services including corporate and finance transactions, mergers and acquisitions, real estate, commercial contracts, bankruptcy, restructuring, international business transactions and general counsel services. Additional background skills and experience include investment banking, financial analysis, and commercial litigation. Sectors covered include technology, media, franchises, and business services providers, from start-ups to medium and large enterprises.

Daliah S. on ContractsCounsel
View Daliah
5.0 (1)
Member Since:
September 1, 2021

Daliah S.

Principal Attorney
Free Consultation
Chicago, IL
19 Yrs Experience
Licensed in IL
University of Illinois College of Law

Daliah Saper operates a cutting-edge internet and social media law practice that regularly leads local and national media outlets to solicit her commentary on emerging internet law issues involving cyberbullying, sexting, catfishing, revenge porn, anonymous online defamation, domain name and user-name squatting, privacy, and the latest business decisions made by social media platforms such as Facebook, Twitter and YouTube. As a litigator Daliah represents companies bringing or defending business and intellectual property disputes. (She has argued cases in a number of jurisdictions including taking a case all the way to the Illinois Supreme Court.) As a transactional lawyer she helps clients choose the right business entity, drafts contracts and licensing agreements, advises on sweepstakes and contest rules, and ensures website terms of use and privacy policies are compliant, and provides comprehensive trademark and copyright counseling. Since founding Saper Law Offices in 2005, Daliah has been named a 40 Under 40 by Law Bulletin Publishing Co., a top Media & Advertising attorney by Super Lawyers Magazine 14 years in a row, and has been repeatedly recognized as a leading media and entertainment lawyer by Chambers and Partners. For the past eleven years, she also has taught entertainment and social media law at Loyola University Chicago School of Law.

Namrita N. on ContractsCounsel
View Namrita
4.9 (12)
Member Since:
August 18, 2021

Namrita N.

Attorney at Law
Free Consultation
Plano, TX
3 Yrs Experience
Licensed in MN, TX
Mitchell Hamline School of Law

Retired Dentist transitioned to Law, with a special interest in Commercial Real Estate, Startup businesses, Asset Purchase Agreements, and Employment Contracts. I love to help dentists and physicians with legal issues pertaining to licensing, credentialing, employment, and general business-legal questions.

T. Phillip B. on ContractsCounsel
View T. Phillip
4.8 (5)
Member Since:
August 10, 2021

T. Phillip B.

Free Consultation
27 Yrs Experience
Licensed in IL
Drake University Law School

Attorney creating plans and strategies to help individuals create, build, protect and pass on wealth.

Simon C. on ContractsCounsel
View Simon
Member Since:
August 5, 2021

Simon C.

Corporate Attorney
Free Consultation
19 Yrs Experience
Licensed in UT
Brigham Young University Law School

Corporate counsel with years of in-house experience working with and reporting to board / executive-level and upper management, along with extensive regional / national law firm background in commercial transactions and contracts, complex commercial litigation, and employment matters. Skilled at executing corporate priorities, driving profitability by implementing goal-oriented processes to achieve revenue and productivity targets, and managing company litigation and outside counsel. Recognized for creating policies and practices to address ethical dilemmas and resolving misconduct.

Jim S. on ContractsCounsel
View Jim
Member Since:
August 13, 2021

Jim S.

Free Consultation
37 Yrs Experience
Licensed in NY
Notre Dame

Jim Slattery most recently served as General Counsel at Regional News Network, a large owner of broadcast television stations. Jim is an experienced attorney with broad-based expertise. He is a seasoned negotiator who has been involved in negotiations as complex as the Olympic Games. Jim spent 18 years as Vice President for Business and Legal Affairs at NBCUniversal. Previously, Jim worked in the media industry in various roles at All American Television. Jim’s success can be attributed to his ability to properly analyze data, manage projects, lead teams, develop creative solutions for complex problems, focus on strategically optimizing assets, manage/allocate risk and collaborate with divergent constituent groups to achieve objectives. Jim received a J.D. and a B.B.A. from the University of Notre Dame.

Jonathan H. on ContractsCounsel
View Jonathan
Member Since:
September 18, 2021

Jonathan H.

Free Consultation
New York
11 Yrs Experience
Licensed in NY
Pace Law School

I’m an attorney focusing my practice on concierge corporate and intellectual property law for startups and high-growth companies. I also serve as outside General Counsel to several businesses in various sectors. Since founding my practice I've worked with hundreds of clients across a variety of industries. My experience as a former General Counsel of a premier edtech company gives me unique insight into the challenges my clients face and how to resolve them efficiently and cost-effectively.

George F. on ContractsCounsel
View George
Member Since:
August 18, 2021

George F.

Free Consultation
Astoria, NY
22 Yrs Experience
Licensed in NY
Fordham University School of Law

The Law Office of George K. Fuiaxis, from the very beginning in 2002, has built a reputation with its clients as an unmatched, diligent, hands on law practice that is always on duty to find the best course of action for its clients. With a supreme pledge of exceptional service to its clients in the areas of Real Estate (Commercial & Residential), Loan Modifications, Intellectual Property, Corporate Law & Business Transactions, Wills, Trusts & Estates, the Law Office of George K. Fuiaxis creates solutions for the many faceted problems faced by its clients. The office represents several various clients, including well known lending institutions, foreign and domestic corporations, sellers and buyers of residential and commercial real estate, residential and commercial landlords and tenants, well known restaurant and business owners, automobile dealerships, airline companies, well known fashion, sports and entertainment industry individuals and corporations, information technology (IT) startups and well known IT companies.

Chris J. on ContractsCounsel
View Chris
Member Since:
August 22, 2021

Chris J.

Outside Counsel
Free Consultation
Irvine, CA
28 Yrs Experience
Licensed in CA
Loyola Law School, Los Angeles

I'm a business law generalist with over 24 years of experience, including as in-house General Counsel, as outside counsel through my own firm and as an attorney in an Am Law 100 law firm. My employers and clients uniformly appreciate my ability to (i) negotiate and close transactions quickly and effectively, and (ii) to make the complex simple. Among other things, I can efficiently assist you on entity formation, governance, and structure; HR issues; mergers and acquisitions; and the negotiation and drafting of all types of commercial contracts. I'm the proud recipient of multiple Martindale-Hubbell Client Distinction Awards given only to the top 5% of attorneys for quality of service.

Gregory W. on ContractsCounsel
View Gregory
Member Since:
August 23, 2021

Gregory W.

Business Attorney
Free Consultation
Los Angeles
16 Yrs Experience
Licensed in CA
University of West Los Angeles

Strategic thinking business minded Outside General Counsel here to help you with your company. I have been able to help guide business owners from startup through series A, B, & C funding and ultimately IPO's. Regardless of your plans I am here to help you succeed as you grow your business.

Find the best lawyer for your project

Browse Lawyers Now

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call