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Business Setup & Legaladvanced

Shareholder Agreement

Definition

A private legal contract between the shareholders of a company, covering decision-making rights, what happens if a shareholder wants to leave, and how disputes are resolved.

Why it matters

A Shareholder Agreement is the co-founder prenup. Without one, a dispute can become a legal nightmare with no clear resolution path. It is far cheaper to create before there is any conflict.

Example

Your Shareholder Agreement includes a "drag-along" clause (majority can force a sale), a "tag-along" clause (minority gets equal terms in a sale), and a buyout formula if a founder leaves.

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