Shareholder Agreement
A Shareholder Agreement supplements your Articles of Association and governs the relationship between shareholders — covering voting rights, share transfer restrictions, anti-dilution, and exit mechanisms. Essential for any company with multiple investors or co-founders.
What is Shareholder Agreement?
A Shareholder Agreement (SHA) is a private contract between the shareholders of a company that supplements the Articles of Association (AoA). Unlike the AoA, which is a public document, the SHA remains confidential. It typically governs: share transfer mechanics (ROFR, ROFO, tag-along, drag-along), anti-dilution protection, board composition and voting thresholds, information and inspection rights, dividend policy, and exit mechanisms (IPO, trade sale). In India, SHAs are governed by the Companies Act, 2013, and the Indian Contract Act, 1872.
What you get
- Customised Shareholder Agreement
- Share transfer restrictions (ROFR, ROFO)
- Tag-along and drag-along provisions
- Anti-dilution (broad-based or narrow-based weighted average)
- Board composition and reserved matters
- Information rights and inspection rights
- Dividend policy and distribution waterfall
- Exit provisions (IPO, strategic sale, put/call options)
- Word + PDF format
Documents required
- Company name, CIN, and registered address
- Names and shareholding of all shareholders
- Nature of the company (private limited, OPC)
- Investment amount and valuation (if fundraising)
- Board composition requirements
- Any specific rights or protections required by any shareholder
- Existing Articles of Association
How it works
Discuss Structure
We understand the shareholding structure, investor requirements, and specific rights each shareholder needs.
Lawyer Drafts
Our lawyer drafts a comprehensive SHA aligned with the Companies Act, 2013, and market-standard VC/PE terms.
Negotiate & Finalise
Circulate to all shareholders' counsel for review. We assist with negotiation and incorporating agreed changes.
Execute
All shareholders execute on stamp paper. File any required intimations with the company secretary.
Pricing on Request
Every situation is different — get a custom quote tailored to your exact needs.
Frequently asked questions
Is a Shareholder Agreement different from the Articles of Association?
Yes. The AoA is a public document filed with the MCA that governs the internal management of the company. An SHA is a private contract between specific shareholders that provides additional protections and is not publicly available. Both must be consistent; in case of conflict, courts generally give primacy to the AoA for binding the company.
What is ROFR and why is it important?
Right of First Refusal (ROFR) requires a shareholder who wants to sell shares to first offer them to existing shareholders at the same price and terms as the proposed third-party sale. This prevents unwanted third parties from entering the company and protects existing shareholders' ownership percentage.
What is anti-dilution protection?
Anti-dilution protects investors from dilution if the company issues shares at a lower valuation (a "down round"). Broad-based weighted average anti-dilution is the most common and investor-friendly approach; full-ratchet is more aggressive. We advise on the appropriate mechanism.
Does a startup need a Shareholder Agreement before seed funding?
Yes, ideally before the seed round. Investors will typically present their own SHA (often heavily investor-friendly). Having a lawyer review or draft the SHA before signing protects founder interests — particularly on liquidation preference, anti-dilution, and board control.
Does the SHA need to be filed with the Registrar of Companies?
No. An SHA is a private document and is not required to be filed with the ROC. However, if any clause restricts share transfer, it is advisable to reflect it in the AoA to bind the company itself (not just the shareholders as parties to the SHA).
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