Corporate template
Shareholders' Agreement Template
Document share classes, board composition, pre-emption rights, drag/tag provisions, and founder vesting to keep your cap table aligned.
Overview
A shareholders' agreement supplements your company's constitution by detailing how equity holders collaborate, resolve disputes, and exit. This template is tailored to venture-backed startups and SMEs seeking clarity on governance and liquidity events.
It covers capital structure, director appointments, reserved matters, dividend policy, information rights, transfer restrictions, exit mechanisms, and dispute resolution. Commentary explains typical investor expectations versus founder protections so you can negotiate balanced terms.
The guide also walks through scenario planning—such as founder departures, new funding rounds, or acquisition offers—to ensure your agreement is future-proof.
Who should use this template?
Founders
Set clear rules for decision-making, vesting, and share transfers to avoid misunderstandings as your company scales.
Investors
Secure board representation, veto rights, and information access while aligning incentives with the founding team.
Corporate secretaries
Maintain compliance by documenting shareholder approvals, share issuances, and exit provisions in a structured agreement.
Key clauses to review
Board and governance
Define board composition, observer rights, quorum, and voting thresholds for strategic decisions.
Reserved matters
List high-impact decisions—such as issuing new shares, incurring debt, or changing business models—that require investor consent.
Share transfer restrictions
Set out pre-emption, right of first refusal, tag-along, and drag-along provisions to manage liquidity events fairly.
Founder vesting and leaver provisions
Align founder equity with commitment by introducing reverse vesting schedules and good/bad leaver definitions.
Drafting tips
- Map out voting thresholds for ordinary versus reserved matters. Use flowcharts or tables to visualise approvals required.
- If you plan employee stock options, include clauses permitting option pools and clarifying dilution mechanics.
- Work with tax advisors to design dividend and liquidation preferences that suit both founders and investors.
- Incorporate confidentiality and non-compete clauses for key shareholders who access proprietary information.
Detailed playbook
Designing your cap table roadmap
Start by documenting current shareholdings, option pools, and outstanding convertible instruments. Use the template's annex to visualise ownership percentages before and after planned investments. This helps you anticipate dilution and ensure everyone remains aligned on growth plans.
When negotiating new funding rounds, update the capital structure schedule promptly. Legalise AI lets you compare versions to show investors how rights evolved over time, improving transparency.
Governance and decision-making
The agreement sets quorum requirements and voting thresholds for board and shareholder meetings. Clearly define which matters need unanimous consent versus majority approval. For operational efficiency, delegate routine decisions to management while reserving strategic moves—like issuing new shares or changing business lines—for shareholder approval.
Consider appointing independent directors or advisors to balance perspectives. Document meeting cadence, notice periods, and information packs to keep governance disciplined.
Handling share transfers
Share transfers can occur due to exits, estate planning, or secondary sales. The template prioritises existing shareholders through pre-emption and rights of first refusal. Outline the timeline for responding to transfer notices and the valuation methodology if shares are bought back.
For tag-along and drag-along rights, specify thresholds that trigger the provisions. Provide sample notices in the annex so parties know how to exercise their rights when a sale opportunity arises.
Founder commitments and vesting
Investors often require founders to vest their shares over three to four years. Use the reverse vesting clause to set the schedule, cliff period, and acceleration triggers for IPOs or acquisitions. Define good leaver events (e.g., illness) versus bad leaver scenarios (e.g., misconduct) so equity outcomes are predictable.
Include confidentiality, non-solicitation, and invention assignment clauses to protect the company when key individuals depart. These obligations safeguard institutional knowledge and customer relationships.
Exit planning
Prepare for liquidity events by detailing IPO, trade sale, or buyback procedures. Outline how proceeds are distributed, taking into account liquidation preferences or participation rights. Document how shareholder approvals will be obtained quickly to avoid missing market windows.
For dispute resolution, provide escalation steps—negotiation, mediation, and arbitration—so conflicts do not paralyse the company. Legalise AI's timeline view records key decisions, making due diligence smoother for future investors or acquirers.
Using Legalise AI for corporate governance
Store your shareholders' agreement, cap table, and board resolutions in a secure workspace. Automate reminders for annual general meetings, reserved matter approvals, and reporting obligations. The AI assistant can draft board minutes, share transfer forms, and investor updates aligned with the agreement's requirements.
When new investors join, duplicate the agreement and let the AI propose updated clauses while preserving negotiated protections. Export clean PDFs for signing or share live documents with tracked changes for negotiation.
Sample clause excerpt
No Shareholder shall transfer any Shares unless the transferor has first offered such Shares to the other Shareholders in proportion to their respective shareholdings at the same price and on the same terms as offered to the proposed transferee. In the event of a Drag-Along Sale approved by the Requisite Investors, all Shareholders shall vote in favour of and take all necessary actions to consummate the sale on the same terms and conditions as the Dragging Shareholders.
Frequently asked questions
Do I still need a shareholders' agreement if I have a constitution?
Yes. The constitution covers statutory requirements, while the shareholders' agreement provides detailed mechanisms tailored to your investors, such as veto rights, reporting obligations, and exit procedures.
How do drag-along and tag-along rights work?
Drag-along rights let majority shareholders force a sale so the company can be acquired efficiently. Tag-along rights protect minority shareholders by allowing them to join the sale at the same price. Both provisions appear in this template with configurable thresholds.
What happens if a founder leaves early?
Good leaver and bad leaver clauses determine how much equity a departing founder retains. Typically, unvested shares are bought back at cost, while vested shares may be repurchased at fair market value depending on the circumstances.
Can we adapt this for later funding rounds?
Absolutely. Update the schedule of shareholders, revise investment amounts, and adjust reserved matters to reflect new investor rights. Legalise AI keeps a version history so you can compare rounds easily.