Two founders, 50/50 shares, no written agreement. It works until it doesn't. What a shareholder agreement actually covers, and why the best time to sign one is when everyone still gets along.
Most small companies start on trust. The founders know each other, the split feels fair, and a formal shareholder agreement seems like an unnecessary expense. The difficulty is that the agreement matters precisely when trust has broken down.
A shareholder agreement answers the questions the articles of association usually don't: What happens if one shareholder wants to leave? Can they sell to anyone? What if you deadlock 50/50 on a major decision? Who can be forced to sell, and at what price?
Common provisions include restrictions on transferring shares, rights of first refusal, 'good leaver / bad leaver' rules for shareholders who are also employees, dividend policies and dispute-resolution mechanisms.
Without these, a departing co-founder can keep their shares forever, sell them to a stranger, or simply stop contributing while sharing equally in the profits. Unpicking that afterwards is slow, expensive and often relationship-ending.
The best time to put an agreement in place is at the start, or at any point when everyone still agrees. The worst time is the week after the argument.
This article is general information, not legal advice. Every situation is different — for advice on yours, speak to a solicitor.
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