Shareholders agreement for a software company

A software company's value is its code, its customers and the people who can maintain the first and sell the second, and all three are at risk from the founders' relationship with each other. The agreement has to confirm that the company owns the code, divide the building and selling roles, put options and vesting in place for the team, protect the customer base and its recurring revenue, and deal with departures that take the product's knowledge with them. The agreement is drafted for the shareholders jointly, after a briefing session with all of them, with a note on how it fits the articles, for a fixed fee of £995 and delivery in five working days.

Who this is for

Founders and shareholders in England and Wales of software, SaaS, app and platform companies at any stage before institutional investment, who want the ownership of the product and the terms between them settled.

What matters in a software company's shareholders' agreement

The code and who owns it

The agreement should contain or confirm an assignment to the company by each founder, under section 90 of the Copyright, Designs and Patents Act 1988, of all IP in the product, including code written before incorporation and on personal time, with moral rights waived, a warranty that no former employer or client has a claim, and a schedule of open source components and their licences; it should also require every contractor and employee who touches the code to have signed an IP assignment, because an employee's work belongs to the company under section 11 of that Act but a contractor's does not, and an acquirer's lawyers will ask for the chain of title line by line.

The technical founder and the commercial founder

The agreement should record each founder's role, authority and commitment, the reserved matters needing both or a stated majority (the roadmap at a strategic level, pricing changes, borrowing, hiring above a level, a funding round, a sale), and the pay each takes, with a salary under a service agreement and a dividend policy operating within section 830 of the Companies Act 2006 when the company is profitable; software founders argue about whether the product or the sales made the company, and equal shares with defined roles and vesting is the usual answer.

Options, vesting and the people who build the product

Founder vesting with a cliff and good and bad leaver terms, supported by compulsory transfer provisions in the articles, protects the founders from each other, and an option pool under the Enterprise Management Incentives scheme in Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003 is how a software company keeps engineers it cannot pay market salaries; the agreement should set the pool's size, the approval process for grants, the leaver terms for option holders, and the restricted securities election under section 431 of that Act for share recipients, with the accountants designing the scheme.

Customers, contracts and the recurring revenue

The customer contracts, the terms of service and the data are the company's, and the agreement should make the standard customer terms, a change to pricing or to the data protection terms, and any customer contract above a stated value or outside the standard terms matters the owners approve; recurring revenue is what a buyer values, and the agreement should set reporting (monthly recurring revenue, churn, cash) to all shareholders and the controls on discounting and on contracts with non-standard liability, which the commercial founder signs and the technical founder discovers later.

Departures and the product's dependence on individuals

The agreement, with matching articles, should require a leaving founder to transfer unvested shares at nominal value and vested shares at the leaver price, to hand over all code, documentation, credentials, cloud accounts and domains, to provide a transition period at a stated rate, and to observe confidentiality and a non-compete limited to the product's field and a period a court will accept; a company whose only engineer leaves with the architecture in their head needs the handover obligations more than the covenant, and the agreement should contain both.

Funding rounds, acquirers and the exit

The agreement should say how the founders will approach a funding round (the reserved matters, pre-emption under section 561 of the Companies Act 2006, the dilution they will accept, SEIS and EIS advance assurance under the Income Tax Act 2007 where relevant), that it will be replaced by the investment documents, and should provide drag-along and tag-along for a sale with the founders' agreement to support an earn-out or a retention; the note on the articles addresses the transfer and vesting provisions under section 33 of the Companies Act 2006.

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

Our product was written by a freelancer we paid. Do we own it?

Only if the freelancer assigned it in writing. If not, the freelancer owns the copyright and the company has a licence at best. A confirmatory assignment signed now cures it, and the agreement requires one from everyone who touches the code.

How big should our option pool be?

A matter for the founders and, later, the investors; the agreement sets the size you choose, the approval process and the leaver terms. The accountants design the EMI scheme.

Can the agreement stop our CTO leaving?

The agreement cannot stop a departure, but it can make leaving early expensive through vesting, require a full handover of code, credentials and documentation, and bind the CTO to confidentiality and a limited non-compete. The handover obligations are what keep the product running.

Related guidance and services

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

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.