Legal & Compliance
Shareholder Agreement
A contract among shareholders governing their rights, obligations, and the company's governance structure.
A shareholder agreement is a binding contract among a company's shareholders that establishes rules for share transfers, voting procedures, board composition, information rights, and dispute resolution. In venture-backed companies, the Investor Rights Agreement, Voting Agreement, and Right of First Refusal Agreement collectively function as the shareholder agreement, establishing the governance framework.
In Practice
The shareholder agreement specifies: 2 investor board seats, 2 founder seats, 1 independent; ROFR on all share transfers; drag-along at 70% approval; monthly financial reporting; and 3x qualified financing for SAFE conversion.
Why It Matters
Shareholder agreements define the rules of engagement between founders and investors. Understanding these terms before signing prevents governance surprises down the road.
Further Reading
How to Negotiate Your Term Sheet: A Founder's Playbook
A tactical guide to negotiating your startup term sheet — which terms matter most, where to push back, and how to protect your interests without killing the deal.
Term Sheet Explained: Every Clause Founders Must Know
Term sheets are dense, jargon-heavy, and consequential. Here's a founder-friendly breakdown of every major clause and what it means for your company.
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