Shareholders agreement for four or more founders

A company with four, five or six founders has a shareholder group that is too large for everyone to decide everything and too close to a founding team for anyone to be left out. The agreement has to set decision thresholds that let the company run, a board that is smaller than the group with the rest kept informed, vesting that deals with reduced involvement, and sale provisions with thresholds that stop one or two holding out. I draft that agreement for all the founders together, with a briefing session and a note on how it fits the articles, for a fixed fee of £995, delivered in five working days.

Who this is for

Founding teams in England and Wales of four or more people, from a university spin-out to a group of colleagues leaving an employer together, who want the structure agreed before the first disagreement.

What matters in a multi-founder shareholders' agreement

Decision thresholds and avoiding a company nobody can run

With many founders, unanimity on anything beyond a short list stops the company, and a bare majority leaves minorities exposed, so the agreement should set thresholds by matter: a defined majority (by shares, or by number of founders, or both) for the important decisions, a higher threshold for the fundamental ones (changing the articles, selling the company, issuing shares, changing the business), and delegation to the board for everything else, with the founders' meeting procedure (notice, quorum, written resolutions) set out; the thresholds should be tested against the actual holdings, because a threshold that one founder can block is a veto.

A board that is smaller than the founder group

Not every founder should be a director, and the agreement should say how many directors there are, which founders sit on the board and for how long, how the others are represented (an observer right, a rotating seat), how the board takes decisions and which decisions go back to the founders, and how a founder director is removed, with the note on the articles addressing the removal of directors under section 168 of the Companies Act 2006 and whether weighted voting is wanted; founders who are not directors should have the information rights the agreement provides rather than a seat.

Vesting and reduced involvement

In a large founding team some will leave, and the agreement should provide vesting for every founder (shares earned over a period with unvested shares bought back at nominal value), good and bad leaver provisions with the categories defined, a valuation method for vested shares, and a mechanism under which the remaining founders take up a leaver's shares in proportion or the company buys them back under section 690 of the Companies Act 2006 where it can; a founder who stops contributing but keeps a full share is the problem vesting exists to solve, and the agreement should define the commitment each founder makes.

Pre-emption, dilution and keeping the group's share

Each founder's pre-emption right on new shares under section 561 of the Companies Act 2006, unless the articles disapply it, should be preserved and the mechanism for offering new shares set out, with the agreement saying how the founders approach an investment round, what dilution they will accept, and whether an option pool for employees comes from the founders' holdings or from new shares; with many founders the agreement should also say whether founders may transfer shares among themselves without pre-emption, and how a founder's connected persons (a spouse, a trust) are treated.

Drag-along, tag-along and the thresholds for a sale

The agreement should provide drag-along at a stated threshold (a majority by shares, perhaps with a minimum number of founders) so that an accepted offer at or above a minimum price takes everyone with it on the same terms, tag-along so that no founder or group can sell control without the buyer offering for all, and the process for an offer (notice, information, the right of the others to match), with compulsory transfer provisions in the articles to bind the shares and a power of attorney for a founder who will not sign; one founder holding out against a sale the rest want is the scenario the thresholds exist for.

Information, dividends and the founders who are not on the board

Founders off the board should receive management accounts, board papers or summaries, and notice of material events, with confidentiality obligations, and the agreement should set the dividend policy (what is distributed and what retained, by whose decision), founder pay and benefits by reference to a policy rather than individual negotiation, restrictive covenants on each founder for a period after leaving, and the relationship with the articles, which bind every shareholder under section 33 of the Companies Act 2006 and need a special resolution under section 21 to change, so that the founders know which document governs what.

What it costs

Shareholders agreement, £995. An agreement between the shareholders of a private company, with a note on how it interacts with your articles. Five working days.

Buying online forms the engagement on payment. The scope is what the shareholders agreement page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A briefing session with all shareholders together, to work through the questions people avoid asking each other
• A shareholders agreement drafted for your actual situation rather than a precedent with the names changed
• A note on how the agreement interacts with your articles, and whether the articles need amending to make it work
• A plain English explanation of every material choice, so nobody signs something they have not understood
• One round of amendments
• Signature-ready documents

What is not included

• Acting for individual shareholders separately, because I act for you jointly
• Company valuation
• Tax structuring, which needs your accountant and should run alongside this
• Amended articles of association and IP assignments, which I quote separately
• Filing at Companies House
• Resolving a dispute that has already started

Questions I am often asked

With six founders, what majority should decisions need?

It depends on the holdings, but typically a bare majority by shares for ordinary matters, a higher threshold for the fundamental ones, and delegation to a board for the rest. The agreement tests each threshold against your actual holdings so that no single founder has an unintended veto.

One founder has gone quiet and does nothing. Can we take their shares?

Only under vesting and leaver provisions that were agreed, supported by the articles. Without them, a founder who stops contributing keeps their shares. The agreement puts vesting in place for everyone from now on.

Do all six founders need to sign for a sale?

Not if the agreement has drag-along at a threshold the rest can meet and the articles contain the compulsory transfer. Without those, every shareholder must agree, and one can hold out.

Related guidance and services

• Shareholders agreement, £995, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Shareholders agreement for three founders
• Shareholders agreement for a tech startup before seed funding

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.