Shareholder Agreement among Founders

Founders make a deal with each other. They typically know each other, and have some idea of each other’s respective strengths and weaknesses.

This Shareholders Agreement ensures that their deal is only changed if they all agree.

If one founder receives an offer for her shares, she can only accept it if her co-founders agree or if her buyer also agrees to buy their shares.

No founder can replace herself without the agreement of her co-founders. They are dealing with her, and may not share her enthusiasm for her replacement.

These sorts of issues need to be regulated. The human element often brings down even the best ideas with the most hard-working team. No-one can remove all of the risks of the human element, but some important ones are taken care of by the Shareholders Agreement.