Shareholder Agreements That Hold Up

A shareholder agreement is a contract between the shareholders of a company that governs their relationship - decision-making, dividends, share transfers, exits, and dispute resolution. It sits alongside the company constitution and is private between the parties.

For any company with more than one shareholder, yes. The constitution is the company's public rulebook. The shareholder agreement is the private contract between shareholders. They do different jobs.

Tag-along rights protect minority shareholders: if a majority owner sells, minorities can force the buyer to also buy their shares on the same terms. Drag-along rights protect majority owners: they can force minorities to sell alongside them if a genuine sale offer comes in, preventing a minority from blocking the deal.

Common triggers are death, permanent incapacity, long-term disability, divorce, bankruptcy, and serious breach of the agreement. Each trigger usually requires the exiting shareholder to sell at a pre-agreed valuation formula, often funded by insurance.

Shareholder agreements are quoted individually because the drafting varies with the number of shareholders, decision-making structure, and specific exit provisions needed. Sam will propose a fixed fee after the initial consultation so you know the cost before work begins.

Yes - usually by written agreement of all parties. Some agreements allow majority amendments on certain issues; others require unanimous consent for all changes. The amendment process is written into the agreement itself.