When starting a business with multiple partners, it is important to have a shareholders agreement in place to govern the relationships between the shareholders. A shareholders agreement is a legal document that outlines the rights and obligations of each shareholder and helps to avoid disputes down the road.

Here are some key clauses that should be included in a shareholders agreement:

1. Shareholders’ Rights and Obligations

This clause outlines the relationship between the shareholders, including their rights and obligations. It should cover issues like how decisions will be made, how profits will be distributed, and how shares can be transferred or sold.

2. Voting Rights

The voting rights clause outlines how decisions will be made within the company. It should specify whether decisions will be made by a simple majority, a two-thirds majority, or some other method. This clause should also specify how shareholders can vote if they are unable to attend a meeting.

3. Board of Directors

The board of directors is responsible for overseeing the management of the company. This clause should specify how many directors will be on the board, how they will be chosen, and how long they will serve. It should also outline the responsibilities of the board, including the appointment of officers.

4. Share Transfers

The share transfers clause outlines the conditions under which shares can be transferred or sold. This clause should specify whether shareholders have the right of first refusal when another shareholder wishes to sell their shares. It should also outline any restrictions on the transfer of shares, such as the need for approval from the board of directors.

5. Non-Competition and Non-Solicitation

This clause prohibits shareholders from competing with the company or soliciting its clients and customers for a certain period of time after they leave the company. This is important to protect the company’s interests and prevent shareholders from taking business away when they leave.

6. Dispute Resolution

Disputes between shareholders are common, and it’s important to have a plan in place for resolving them. This clause should outline the process for resolving disputes, whether through mediation, arbitration, or other means.

A well-drafted shareholders agreement is an essential tool for any business with multiple shareholders. By including these important clauses, you can help to protect the interests of all shareholders and avoid disputes down the road.