Before starting a company with partners, do you know exactly what happens if one of them wants to leave, sell their share, or make decisions without alignment? The shareholders’ agreement exists precisely to prevent these problems.
A shareholders’ agreement (also called a quotaholders’ agreement in limited liability companies) is a contractual document that defines the rules, rights, and obligations among the partners of a company, with the purpose of preventing conflicts, aligning expectations, and ensuring business stability.
It complements the articles of incorporation or bylaws — while those address the company’s formal and legal aspects, the shareholders’ agreement goes deeper into issues of governance, decision-making, partner entry and exit, and strategic alignment.
It is an effective instrument for implementing the first steps of corporate governance, creating a more predictable and transparent environment for the company — fundamental pillars for the longevity of any business.
Purpose
- Avoid disputes by defining, from the start, how to resolve deadlocks.
- Protect business continuity in cases such as death, sale of ownership, or strategic disagreement.
- Provide clarity regarding the rules for partner entry, permanence, and exit.
- Preserve the company’s control and vision.
Main Clauses of a Shareholders’ Agreement
- Governance and voting rules
- Rights and obligations of each partner
- Partner entry and exit
- Protection against unwanted sales
- Conflict resolution
- Special situations
Benefits
- Reduces future litigation and legal costs.
- Provides security for investors.
- Ensures continuity and stability in decision-making.
- Protects both majority and minority shareholders.
Key Considerations
- Must align with the company’s articles of incorporation/bylaws to avoid interpretation conflicts.
- It is highly advisable to have specialized legal counsel draft it.
- It is a confidential document, generally not registered with the Board of Trade (unless you wish to make it enforceable against third parties).
Now that you understand the importance and structure of a shareholders’ agreement, let’s see how it can be practically structured.
Shareholders’ Agreement – Model Adapted for Startups
PARTIES:
This agreement is entered into by the partners identified below, hereinafter collectively referred to as “Partners” and individually as “Partner”:
- Founding Partner 1: Name, CPF (Tax ID), address.
- Founding Partner 2: Name, CPF, address.
- (Add other founders and/or investors)
1. Purpose and Integration with Articles of Incorporation
This agreement governs the relationships among the Partners of [Startup Name], CNPJ No. [number], hereinafter the “Company,” complementing its Articles of Incorporation or Bylaws. In the event of any conflict between this agreement and the Articles, the provisions of this document shall prevail in the internal relations among the Partners.
2. Share Capital and Ownership
- Initial share capital: R$ [amount].
- Initial ownership structure:
Contributions may be in cash, assets, intellectual property, or know-how, as duly recorded.
3. Rights and Obligations
Each founding partner agrees to actively contribute to the development of the startup’s product, operations, or management.
The Partners agree to:
(Complete as applicable)
4. Governance and Decision-Making
- Operational decisions: Simple majority of votes present.
- Strategic decisions (fundraising, change in corporate purpose, mergers/acquisitions, relocation): Qualified majority of [70]% of the capital.
- Critical decisions (sale of control, ownership change causing dilution above [X]%): Unanimous approval by founding partners.
5. Entry and Exit of Partners
- New partners shall only be admitted with approval from [X]% of the capital.
- Right of first refusal in the sale of shares/quotas.
- Lock-up: Founders may not sell their participation during the first [36 months], except in an approved liquidity event.
- Voluntary exit before vesting completion results in the loss of unvested shares.
6. Vesting
- Founders’ ownership will be subject to a 4-year vesting schedule with a 12-month cliff.
- After the cliff, vesting occurs monthly on a pro-rata basis.
- Voluntary exit or termination for cause before completion leads to repurchase of unvested shares by the Company or remaining partners at nominal value.
7. Investor Protection and Dilution
- All new funding rounds and issuance of new shares/quotas must be approved by all partners.
- Investors may be granted proportional or full anti-dilution protection, as negotiated.
- Founders agree to sign any complementary instruments required by investors (international shareholders’ agreements, vesting agreements, etc.).
8. Tag-Along and Drag-Along
- Tag-Along: In a control sale, minority partners have the right to sell under the same conditions.
- Drag-Along: If partners holding [X]% of the capital approve a full company sale, all other partners are required to sell under the same terms.
9. Profit Distribution
- The startup may retain up to [100]% of profits for reinvestment until reaching operational sustainability, as decided by a qualified majority.
- Partial distributions may only occur after achieving minimum cash metrics.
10. Non-Solicitation
For [2 years] after departure, an ex-partner may not hire, attempt to hire, or influence company employees or clients.
11. Valuation of Shares
Valuation for buy/sell purposes shall be based on market value, determined by an independent firm or agreed multiple, less liabilities.
12. Dispute Resolution
Conflicts shall first be addressed through mediation.
If unresolved, they shall be settled by arbitration administered by [arbitration chamber], in [city], in Portuguese.
13. Final Provisions
- Amendments shall only be valid if made in writing and signed by all partners.
- Executed in [X] counterparts of equal content.
Signatures:
Founding Partner 1 – Name
Founding Partner 2 – Name
The shareholders’ agreement is not just a legal document — it is a pillar of governance and strategic alignment. Before signing, carefully discuss each clause and adapt the content to your company’s reality.