what is a shareholders agreement 
a shareholders agreement also called a stockholders agreement is an arrangement among shareholders that describes how a company should be operated and outlines shareholders rights and obligations the agreement also includes information on the management of the company and privileges and protection of shareholders the basics of a shareholders agreementthe shareholders agreement is intended to ensure that shareholders are treated fairly and their rights are protected the agreement includes sections outlining the fair and legitimate pricing of shares particularly when sold it also allows shareholders to make decisions about what outside parties may become future shareholders and provides safeguards for minority positions a shareholders agreement includes a date often the number of shares issued a capitalization table that outlines shareholders and their percentage ownership any restrictions on transferring shares pre emptive rights for current shareholders to purchase shares to maintain ownership percentages for example in the event of a new issue and details on payments in the event of a company sale shareholder agreements differ from company bylaws bylaws work in conjunction with a company s articles of incorporation to form the legal backbone of the business and govern its operations a shareholder agreement on the other hand is optional this document is often by and for shareholders outlining certain rights and obligations it can be most helpful when a corporation has a small number of active shareholders example of a shareholders agreement for an entrepreneurial venturemany entrepreneurs creating startup companies will want to draft a shareholders agreement for initial parties this is to ensure clarification of what parties originally intended if disputes arise as the company matures and changes a written agreement can help resolve issues by serving as a reference point entrepreneurs may also want to include who can be a shareholder what happens if a shareholder no longer has the capacity to actively own their shares e g becomes disabled passes away resigns or is fired and who is eligible to be a board member as with all shareholder agreements an agreement for a startup will often include the following sections 