Shareholders Agreement: start-up business multiple investors

Shareholders Agreement: start-up business multiple investors

Shareholders agreement following the investment in a start-up business by multiple investors.

Background

When use a separate Shareholders Agreement?

Having a separate Shareholders Agreement is likely to be more suitable for a company:

• which already has non-management shareholders or investors, perhaps as a result of a previous investment round
• which anticipates having future funding rounds

About this Shareholders Agreement

This document is for a shareholders agreement following an investment by multiple investors in a start-up private limited company. It acts as the shareholders agreement between the investors and the founders of the company going forward.

Rights of the investors are exercisable by a majority of the investors.

Document features

• investor director: the investors’ right to appoint a director
• board proceedings: how proceedings of the board will be conducted
• future share issues: pre-emption rights on the issue of new shares
• share transfers: process for the transfer of shares, including:
  • pre-emption rights on share transfers
  • compulsory transfer events, including if a founder ceases to be employed by the company whether as a good or a bad leaver
  • tag-along and drag-along rights
• reserved matters: a list of matters requiring the prior approval of the investor majority
• information rights: rights of the investors to information about the company and its finances
• restrictive covenants: restrictions on the founders in terms of competing with the company and soliciting customers, suppliers and employees of the company

Explanatory guidance

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