Partner agreements in startups

It is quite common that when creating a startup, we partner with friends and family, and, due to trust, we do not establish the obligations of each one and the commitments that society assumes. It may happen that over time, problems arise that could be avoided by signing a shareholders’ agreement. We tell you what startup partner agreements are and what content they may have.

What is a shareholders’ agreement?

As we already explained in depth in a previous article, a partners’ agreement is a document that is signed by all or part of the partners of a company to regulate internal aspects of its operation and establish what happens in some instances such as the departure of a partner, the entry of investors or the sale of the company.

They are also called shareholders’ agreements because they are drawn up outside the company’s Statutes to regulate more specific aspects of its operation. This does not mean that shareholders’ agreements are not obligatory. They are obligatory for the people who have signed them.

What can be regulated in a shareholders’ agreement?

The purpose of the shareholders’ agreement is to avoid problems in the future that block the functioning of the company. </ strong> For example, imagine that an investor wants to enter the company and a small part of the partners prevents it or that a founding partner wants to leave and his presence is essential.

The agreements that are usually included in agreements between partners are the following:

• Agreements for voting can be regulated to avoid blockages in decision-making at the Shareholders’ Meeting or the Board of Directors.
• Functions of each partner and remuneration. From the beginning, it must be clear what each partner will do and how they will be compensated so that there are no doubts later.
• Permanence commitment. It is another typical agreement to prevent the founding partners from leaving the company and selling their shares to a third party. It is usually established that they will have an obligation to remain in the company for a certain time.
• It implies the agreement of the partners to keep secret certain aspects of the company that, if brought to light, would harm its activity. For example, data relating to an innovative product or service unknown to the competition.
• Compensation for non-compliance. In addition to the obligations, a series of compensations are usually established that the partner who does not comply with the partners’ agreement that he or she has signed will have to pay.
• Entry of partners. This is one of the most important aspects to regulate because, in startups, there may come a time when an investor wants to enter the share capital in exchange for having certain decision-making power. The regulation of the entry of partners allows for establishing the conditions under which the purchase of shares by the investor will occur and what it entails.

In general, with the partners’ agreement, the aim is to ensure that the project has continuity and does not stagnate due to not having foreseen common situations in the careers of companies that have launched a project recently.