You are all familiar with the founding agreement for the establishment of a limited liability company, which is necessary for the establishment of a company in the Business Registers Agency.
However, in business practice, especially among young entrepreneurs and founders of start-ups, the Shareholder Agreement is rarely concluded, which has much greater importance for the daily functioning of the company and the long-term success of the start-up project.
The quality development of your startup does not depend only on innovative ideas and a good team. It requires a solid legal framework, especially when it comes to the relationship between the founders and the relationship between the founders and the company.
Why? Because the success of your venture hinges not just on what you do, but also on how you agree to do it together. Let’s break down the essentials:
• Goal: It is very important that at the beginning of your business you have a jointly defined goal to strive for
• Clear roles and responsibilities: A Shareholders’ Agreement brings transparency of the roles, rights, obligations, and responsibilities of the founders. It is a blueprint for cooperation and success.
• Governance Guidelines: Decision-making protocols and dispute resolution mechanisms are your navigational tools through the startup journey.
• Vesting Schedules: These are your commitment incentives. They ensure that equity is earned over time, safeguarding the startup’s future • Protect your innovations: Intellectual property rights are the core value of your start-up company. Make sure your contract addresses who owns these rights.
• Collect investments: For investors in start-up companies, it is very important that the relations between members, as well as between the company and members, are clearly and precisely regulated.
• Confidentiality: Unlike the founding agreement, the Members’ Agreement is not made public, but remains exclusively between the founders.
• Dispute resolution: If you have a pre-defined path for resolving disagreements, your focus remains on growth.
The members’ agreement is not just a legal formality; it is the strategic core of your startup’s management structure. It’s about setting the stage for growth, innovation, and collaboration.
Let’s discuss: What challenges have you faced in drafting or negotiating your Shareholder Agreement? Share your experiences!