Introduction: Shareholder Agreements

Introduction

After incorporating a business and organizing the corporate records, it is heavily recommended that the founders of a startup enter into an agreement that governs the relationship between the founders (or the broader group of shareholders). This agreement is referred to as the Shareholders Agreement. A shareholders agreement is often mistakenly referred to as a “partnership agreement” (which is an agreement amongst partners in a partnership).

Shareholders Agreements typically cover the following topics:

  • Operation and management of the corporation
  • Necessary approvals required to effect certain corporate actions
  • Restrictions on transferring of shares
  • General shareholder rights and protections
  • Minority shareholder rights and protections
  • Non-competition, non-solicitation and requirement to maintain confidentiality
In this Article, we will answer the following questions:
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