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Startup Shareholder Agreement for the United States

Startup Shareholder Agreement Template for United States

A Startup Shareholder Agreement is a legally binding contract that governs the relationship between shareholders in a startup company under U.S. law. It establishes key rights and obligations, including share transfer restrictions, voting rights, board composition, and protective provisions. This agreement is crucial for defining corporate governance structure, managing potential conflicts, and establishing clear protocols for future company events such as funding rounds or exits.

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What is a Startup Shareholder Agreement?

The Startup Shareholder Agreement serves as a foundational document for emerging companies in the United States, typically implemented during or shortly after company formation. This agreement is essential when multiple founders, investors, or early employees hold equity stakes in the business. It addresses crucial aspects such as share transfer restrictions, voting rights, board representation, and exit provisions. The document helps prevent potential disputes by clearly defining shareholders' rights and obligations, while also providing mechanisms for company growth and future investment rounds.

What sections should be included in a Startup Shareholder Agreement?

1. Parties: Identification of all shareholders and the company

2. Background: Context of the agreement and company formation details

3. Definitions: Key terms used throughout the agreement

4. Share Structure: Details of share classes, rights, and ownership distribution

5. Transfer Restrictions: Rules governing the sale or transfer of shares

6. Voting Rights: Shareholder voting mechanisms and thresholds

7. Board Composition: Structure and appointment of board members

8. Reserved Matters: Decisions requiring special majority or unanimous consent

What sections are optional to include in a Startup Shareholder Agreement?

1. Anti-dilution Protection: Protection against share value dilution in future funding rounds

2. Tag-along Rights: Right for minority shareholders to join in sale of shares by other shareholders

3. Drag-along Rights: Provisions allowing majority shareholders to force minority shareholders to join in sale

4. Vesting Provisions: Schedule and conditions for earning shares over time for founder or employee shareholders

What schedules should be included in a Startup Shareholder Agreement?

1. Schedule 1: Share Capital Table: Detailed breakdown of shareholding structure and ownership percentages

2. Schedule 2: Reserved Matters List: Comprehensive list of decisions requiring special approval

3. Schedule 3: Deed of Adherence: Template for new shareholders joining the agreement

4. Schedule 4: Company Details: Registration details, directors, and registered office information

5. Schedule 5: Valuation Methodology: Agreed method for share valuation in transfers or exits

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

United States

Publisher

Ƶ

Cost

Free to use
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Industries

Securities Act of 1933: Federal law that regulates the offering and sale of securities, requiring registration or qualifying for exemptions for private placements

Securities Exchange Act of 1934: Federal law governing secondary market trading and establishing the SEC, relevant for any future trading of shares

Delaware General Corporation Law: Comprehensive set of laws governing corporate operations in Delaware, often the preferred incorporation state for startups

Internal Revenue Code: Federal tax regulations affecting equity distributions, stock options, and other shareholder-related tax matters

JOBS Act: Legislation easing securities regulations for small businesses, including provisions for private companies raising capital

State Corporation Laws: State-specific regulations governing corporate formation, operation, and shareholder rights in the respective state of incorporation

Blue Sky Laws: State-specific securities laws regulating the offering and sale of securities to protect investors from fraudulent activities

SEC Regulation D: Federal regulations providing exemptions for private placement offerings, particularly Rule 506 for startup fundraising

Sarbanes-Oxley Act: Federal law establishing corporate governance standards, relevant if the company plans to go public in the future

Employment Law Considerations: Regulations governing equity compensation, stock options, and rights of shareholder-employees

Intellectual Property Laws: Federal and state laws governing IP rights, assignments, and protection mechanisms for company intellectual property

Share Transfer Provisions: Legal framework for restrictions and procedures regarding the transfer of shares between parties

Voting Rights Regulations: Laws governing shareholder voting rights, procedures, and protections for minority shareholders

Pre-emptive Rights: Legal provisions giving existing shareholders the right to maintain their ownership percentage in future stock issuances

Tag-Along and Drag-Along Rights: Legal mechanisms protecting minority shareholders in sale scenarios and enabling majority shareholders to force sale participation

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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