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Shareholder Agreement In Startups

A shareholder pact has been useful mainly because it creates a sense of commitment between the co-founders of a startup. If we ignore the need for a shareholder pact, there is more risk because, as with any company, problems can arise and it is important to have a game plan in front of these situations to act as an effective reference mechanism, which is what needs to be done in these circumstances. In addition, a shareholder pact serves as a protection and buffer between partners/co-founders in the event of problematic circumstances, and is considered to be more effective, as co-founders will spend less time debating, arguing and arguing in difficult situations if they have the agreement to return. This document can discuss what should happen in the event of the death of one of the shareholders and answers important questions as to whether their shares in the company should be transferred to other founders or partners or whether they should be transferred to the next kinship. An important part of creating a stable base for each start-up is to ensure that the most important introductory documents are available. The shareholders` pact is one of those critical documents. Also known as the „founder`s contract,“ it is a private contract between the founders that defines their rights and obligations with respect to their interests and roles in the company. This document ensures that the expectations of all founders are clear and presents a game plan to deal with problems before they occur. At the beginning of a start-up, the founders have high expectations about their idea of a company and are often convinced that it will be a great success. At this point, many founders forget that it is also important to apply preventive measures to solve complex situations that can occur.

This is why a shareholder pact can guarantee the legal security of the start-up and also help prevent situations that could jeopardize the growth of the company. Failure to plan ahead: No buyout commission for the sale of your business. Investor safety is often the primary focus of many startups. Now imagine finding the ideal investor while being powerless to sell all or part of your business simply because the founder, who holds a minority stake, blocks the sale. This is exactly what happens when there are no rules, when the majority of founders want to move forward with an agreement. With a drag-along right, a majority of founders can sell their shares in the company and those who hold a minority stake must sell their shares on the same terms for the sale to progress. We must bear in mind that it is important not only to define the rules, but also to include the obligations and rights granted to the parties so that the agreement is valid and applicable. It is important to get expert advice on these issues.