The shareholder’s agreement in a VC round

A very formal document (not easy to read!), it often exceeds 50 pages in length (!), but you need to make the effort to understand it, as it is the reference document for relations between investors and founders.

The negotiation of certain clauses is often laborious and gives rise to numerous discussions, but in general, once the agreement has (finally) been signed, it is no longer of concern until the investors’ exit, unless a problem arises …..

Important clauses in the shareholders’ agreement (some clauses may be included in the company’s articles of association) : 

Shareholding related clauses : 

• right of preemption
• tag along” rights
• investors’ right of withdrawal
• liquidity clause
• preferential liquidation.
• forced exit (“drag along”)
• ratchet

Governance related clauses : 

• supervisory board / strategic committee
• distribution of seats
• role / powers
• right of veto
• enhanced information clause (reporting)

Founding team related clauses :

• lock-up / breathing clause
• bad leaver and good leaver clauses
• exclusivity
• non-compete

WHAT SHOULD YOU KEEP IN MIND ?

Shareholder’s agreement clauses are numerous and dense.

Some clauses are the subject of more discussion than others, such as preferential liquidation, ratchet and decision-making clauses.