Co-founders agree how the company is run and shares are held. Answer a few plain-English questions and Scorpia drafts the complete document for your situation, checks it with a second review pass, and shows you a free preview before you pay anything.
Draft my shareholders agreement (founders) — free preview →SHAREHOLDERS' AGREEMENT
Private company limited by shares — founders (and, where applicable, investors)
THIS DEED is made on __________
BETWEEN:
(1) __________ (Company Number: __________), whose registered office is at __________ (the "Company");
(2) __________ of __________; and
(3) __________ of __________,
(4) __________ of __________,
(each a "Shareholder" and together the "Shareholders").
BACKGROUND
(A) The Company is a private company limited by shares. At the date of this Deed its issued share capital is as set out in Schedule 1 (the "Cap Table").
(B) The Shareholders have agreed to regulate their relationship as shareholders and the management of the Company on the terms of this Deed. The Company is a party so that it may benefit from and give effect to its provisions, but nothing in this Deed requires the Company to do anything which would be an unlawful fetter on its statutory powers.
(C) The Company has adopted, or shall on the date of this Deed adopt by special resolution, articles of association in the form in Schedule 5 (the "Articles"), which contain the transfer restrictions, compulsory transfer, deferred-share, quorum, director-appointment and drag/tag provisions necessary to give this Deed effect against all members and transferees. This Deed takes effect only when the Articles have been adopted, and the Company confirms that the Articles in Schedule 5 contain those provisions.
AGREED TERMS
1. DEFINITIONS AND INTERPRETATION
(1.1) "Bad Leaver" means a Leaver who is not a Good Leaver. "Board" means the board of directors of the Company. "Business" means __________. "Cessation Date" means the date a Leaver's employment, engagement or office with the Company ends (or notice of termination is given, if earlier). "Control" has the meaning in s.1124 Corporation Tax Act 2010. "Deed of Adherence" means a deed in the form in Schedule 4. "Fair Value" means the value determined under clause 10.8. "Founder" means __________. "Founder Shares" means the Shares held by a Founder and its Permitted Transferees. "Good Leaver" means a Leaver whose cessation results from death, permanent incapacity, redundancy, wrongful or unfair dismissal (as found by a tribunal or admitted), or resignation after the __________ anniversary of the Vesting Commencement Date, or whom the Board (excluding the Leaver) designates a Good Leaver. "Leaver" means a Founder who ceases to be employed or engaged by, or a director of, the Company. "Permitted Transferee" means, for an individual Shareholder, a spouse or civil partner, child or a trust for their benefit, provided that the transferor retains voting control and the transferee signs a Deed of Adherence. "Reserved Matters" means the matters in Schedule 2. "Sale" means a transfer of Shares resulting in a person (with its connected persons) acquiring Control of the Company, or a sale of all or substantially all of the Business. "Shares" means shares of any class in the capital of the Company. "Unvested Shares" and "Vested Shares" have the meanings in clause 9. "Vesting Commencement Date" means __________.
(1.2) Headings are for convenience; "including" is illustrative; statutory references include amendments; "writing" includes email; the Schedules form part of this Deed.
2. THE BUSINESS AND OBJECTIVES
(2.1) The Shareholders shall procure, so far as they lawfully can by exercising their rights as shareholders and directors, that the Company carries on the Business in accordance with the business plan and annual budget approved under clause 5, in a proper and efficient manner, for its own benefit, and complies with all applicable laws.
A founders' shareholders agreement is the document two or more people sign when they start a company together and want to agree, while they are still friends, what happens when they are not. It sits alongside the articles of association and is private, unlike the articles, which are filed at Companies House.
Without an agreement, the Companies Act 2006 and the model articles decide everything. There is no way to force a founder who leaves after six months to sell back their shares; a 50/50 company has no mechanism to resolve a deadlock; a founder can sell to a stranger; and a minority holder has almost no say. Most founder disputes that reach lawyers would have been settled in a paragraph if the agreement had existed.
How the business is run: who sits on the board, what needs unanimous or majority consent (new shares, borrowing above a threshold, selling the business, hiring senior staff, paying dividends), and what information each founder receives. How shares move: a lock-in period, pre-emption rights so existing holders get first refusal, tag-along and drag-along rights so a sale of the company takes everyone or no one, and good-leaver and bad-leaver provisions so a founder who leaves early, or is dismissed for cause, sells back at a fair or discounted price. Vesting of founder shares over three or four years with a cliff is standard in investable companies.
Deadlock resolution, restrictive covenants while a founder holds shares and for a reasonable period after, confidentiality, a dividend policy, and what happens on death or insolvency of a founder. Because directors' statutory duties under section 171 onwards cannot be overridden, the company's own obligations are limited accordingly.
The two must not conflict. The agreement includes a clause that it prevails between the shareholders and that they will amend the articles to match; where share-transfer restrictions are intended to bind future shareholders they must also go into the articles. Scorpia's founders' articles template is drafted to pair with this agreement.
Yes. It is precisely because you trust each other now that you can agree fair terms for a future in which one of you wants out, falls ill, or stops contributing.
A founder who leaves for an agreed reason (illness, redundancy, after the vesting period) sells at fair value; one who resigns early or is dismissed for cause sells at a discount or at the price paid. The questions let you set the terms.
By an independent accountant under a mechanism in the agreement, unless the parties agree a figure.
Investors typically replace it with their own agreement on investment. Having one in place beforehand makes that negotiation faster and shows the founders have thought it through.
It is signed as a simple contract by all shareholders and the company; no witness is needed unless you choose to execute it as a deed.
No. Scorpia is software that drafts and checks documents. It is not a law firm and does not give legal advice. For a dispute, a company sale or anything unusual, use a solicitor.