Shareholders Agreement (SHA)
Protect founder and investor rights with a robust SHA before closing your funding round
What is Shareholders Agreement (SHA)?
A Shareholders Agreement governs the rights and obligations of all shareholders — founders, investors, and ESOPs — in a private company. We draft or review SHAs to ensure founder protections, board composition, and exit rights are fairly balanced for your round.
When a startup raises institutional funding, the investor requires a Shareholders Agreement (SHA) alongside the subscription documents. The SHA is one of the most consequential documents a founder signs — it defines board composition, reserved matters requiring investor consent, anti-dilution protection, information rights, tag-along and drag-along rights, right of first refusal, and founder lock-in. Founder-friendly versus investor-friendly terms can significantly affect how much control founders retain and under what conditions they can exit. Getting independent legal review of the SHA before signing is critical — terms accepted in a Seed round can constrain future rounds and the exit.
Who Needs Shareholders Agreement (SHA)?
Founders closing a priced equity round, angel or institutional investors subscribing to shares, companies restructuring their cap table, and any startup where more than one class of shareholders exists.
What's Included
- Board composition and voting rights reviewed and negotiated
- Reserved matters list scoped to minimum investor controls
- Anti-dilution mechanism (broad-based weighted average recommended over full ratchet)
- ROFR and tag-along / drag-along provisions balanced for founders
- Founder lock-in period and good-leaver / bad-leaver definitions reviewed
⚠️ Penalty for Non-Compliance
An SHA accepted without careful review can vest a board veto with investors over key business decisions, include punitive anti-dilution clauses on a down round, or lock founders in under conditions they did not fully understand.
How It Works
- 1
Share the term sheet and cap table
Provide the investor term sheet, cap table, and any existing shareholder documents so we can map the current position.
- 2
SHA review or draft
If the investor has sent a draft SHA, we review and redline it. If you are drafting first, we prepare a founder-friendly starting position.
- 3
Negotiation support
We attend or support negotiation calls and explain the commercial impact of each proposed change.
- 4
Finalisation and execution
The agreed SHA is executed alongside the subscription agreement. We ensure the Articles of Association are aligned.
Documents Required
Items marked Required are mandatory; others are situational.
Company documents
- Cap table (current and post-money)Required
- Investor term sheet
- Existing Founders Agreement or prior SHA
- Articles of AssociationRequired
Fees & Pricing
Fees
Government fee
No mandatory government filing; Articles amendments require a nominal ROC fee
Professional fee
Quoted after reviewing the term sheet and cap table
* Government fees may vary. GST applicable on professional fees. Final pricing confirmed after review.
Frequently Asked Questions
What is the difference between a Founders Agreement and a Shareholders Agreement?
A Founders Agreement is signed at the start between co-founders, before external investment. A Shareholders Agreement involves all shareholders — founders and investors — and governs the company after a funding round.
What is a reserved matter?
A reserved matter is a decision that requires investor approval beyond the normal board or shareholder majority. Common reserved matters include issuing new shares, taking on significant debt, and changing the business.
What is anti-dilution protection?
Anti-dilution protects an investor's percentage ownership if the company raises money at a lower valuation (a down round). Broad-based weighted average is the most common and balanced form. Full ratchet is very punitive for founders.
What is a drag-along right?
A drag-along right allows a majority shareholder to force minority shareholders to agree to a sale of the company on the same terms. It prevents a minority from blocking an exit.
Can the SHA override the Articles of Association?
In practice, the SHA often contains obligations that supplement the Articles. For consistency and enforcement, key SHA protections should be mirrored in the Articles. We flag any misalignment.
Is an SHA confidential?
Yes — unlike statutory filings, the SHA is a private contract. It is not filed with the Registrar of Companies and is only shared with the parties.
Detailed guides for Shareholders Agreement (SHA)
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