Five things to agree before you sign a shareholders’ agreement

Mei and two friends are opening a café in Kota Kinabalu. Before they sign a shareholders’ agreement, these five questions are easier to answer now than in the middle of a disagreement.

“So who owns what?”

1 · OWNERSHIPAgree how the shares are split, what each person contributes, and whether new shares can be issued later.

“Who gets the final say?”

2 · DECISIONSDecide who sits on the board, and which big decisions need every shareholder’s approval.

“What if one of us leaves?”

3 · EXITSSet out how shares can be sold, and whether existing shareholders get the first chance to buy them.

“And if we can’t agree?”

4 · DEADLOCKAgree in advance how a stalemate will be broken, for example through mediation or a buy-out mechanism.

“What if someone stops working?”

5 · COMMITMENTConsider whether shares should be earned over time, and what happens to them if a founder steps away early.

Follow Mei from her first idea to an international business, one legal step at a time.

This comic is general information, not legal advice. Every business is different, so speak to a lawyer about your own situation.

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