What actually belongs in a shareholders' agreement

Co-founders rarely fall out over the things they discussed. They fall out over the things each assumed the other understood. A shareholders' agreement is a structured way of having those conversations while everyone is still on good terms.

Ownership, and what it was given for

Start with the split, and be explicit about what each person's shares are consideration for: capital, work, intellectual property, introductions. Ambiguity here causes a surprising number of disputes, because people remember contributions differently two years on.

Vesting

Vesting means shares are earned over time rather than owned outright from day one. It answers one question: what happens if a co-founder holding a large stake leaves after six months?

Without vesting, they leave with the stake, and the people who stay build the company for someone who is no longer there. A vesting schedule is not distrust between founders. It is evidence that both have thought about the downside.

Decision-making

Separate day-to-day management decisions from those needing shareholder approval. Typical reserved matters: issuing shares, taking on significant debt, selling the business, changing what it does, and related-party transactions.

Address deadlock too. Two shareholders with equal stakes and no tie-breaker is a structure that works right up until it does not.

Transfers

Who can sell shares, to whom, on what terms? Common provisions include pre-emption rights, tag-along rights so a minority can join a majority sale, and drag-along rights so a majority can require a minority to sell. These matter less on the day they are drafted than on the day someone wants out.

Leavers

What happens to shares when someone departs, and does it depend on why? Many agreements distinguish a "good leaver" from a "bad leaver". Whatever you choose, define the terms precisely. Vague leaver provisions produce arguments at exactly the moment goodwill is scarce.

Money, confidentiality and IP

Set out dividend policy and whether shareholders can be required to contribute further funds. Add confidentiality, reasonable restrictions on competing, and a clear assignment of intellectual property to the company. On that last point: if a founder wrote the core product before incorporation, the company does not own it automatically.

How disputes are handled

An escalation path (direct discussion, then mediation, then a defined forum) gives a disagreement somewhere to go other than straight to court.

The document matters. The conversation matters more. Working through these clauses shows founders early and cheaply where they were not aligned.