When do you need a shareholders’ agreement?
- By : Wong Mei Ying
- Category : Linkedin Post, Shareholders' Agreement
It should be before there’s conflict, not after.
The ideal time is:
• when the business is starting out; or
• when there is a new shareholder.
Without it, even strong relationships can break down when there are changes.
I’ve seen it happen when one corporate shareholder changes management. The other shareholder gets sidelined. There is no clear way out as there is not shareholders’ agreement.
A well-drafted shareholders’ agreement covers:
• exit options if the relationship breaks down
• minority protections on key decisions
• clarity on how the business should be run.
Many founders and shareholders ask for fee quotes on shareholders’ agreements, but few follow through, treating them as a “nice to have.”
Conversations about shareholder issues may not always be easy, but it’s far better to reach an agreement while the relationship is amicable than to negotiate amid conflict.
This post was first posted on LinkedIn on 9 June 2025.
