Shareholders agreement for two founders with equal shares

Two founders with half the shares each can each block everything and neither can decide anything, which is fine while they agree and the whole problem when they do not. A shareholders' agreement for a fifty-fifty company is mostly about the day the founders disagree: how a deadlock is broken, which decisions need both of them, what happens when one wants to leave, and how the company is sold. I draft that agreement for both founders together, with a briefing session for the questions people avoid asking each other and a note on how it fits the articles, for a fixed fee of £995, delivered in five working days.

Who this is for

Two founders in England and Wales who own a company equally, whether at the start, after a year of trading, or when an investor or a bank has asked whether there is an agreement, and want it done before it is needed.

What matters in a fifty-fifty shareholders' agreement

Deadlock and how it is broken

With equal shares neither founder can pass an ordinary resolution without the other, and if both are the only directors the board is equally stuck, so the agreement should define a deadlock (a matter proposed twice and not agreed), provide an escalation (a cooling-off period, then mediation), and a resolution mechanism: a casting vote on defined operational matters, an independent third director or chair, or a buy-out mechanism under which one founder names a price and the other must buy or sell at it; the mechanism chosen should be one both founders would use, because a mechanism nobody will trigger is no mechanism.

The decisions that need both founders

The agreement should list the matters that cannot be done without both founders' consent (issuing shares, borrowing above a limit, changing the business, selling assets, hiring or paying above thresholds, changing the articles, appointing directors, dividends), which in a fifty-fifty company is partly belt and braces, since neither can pass a resolution alone, and partly protection against a founder acting as a director without a board decision; it should also say how the founders take decisions day to day and which operational matters each may decide within their role.

Roles, time and pay

The agreement should record each founder's role and responsibilities, the time each commits (full time, or a stated commitment while keeping another job), how they are paid (salary under a service agreement, dividends, or both) and that pay is set by agreement rather than by one founder, and what each may do outside the company; a founder who contributes less time than the other while holding the same shares is the commonest source of resentment, and the agreement should address it with vesting or a different split rather than silence.

What happens when one founder leaves

The agreement, supported by the articles, should require a departing founder to offer their shares to the other (or the company) at a price depending on why they left: a good leaver (death, illness, agreed departure after a period) at fair value, a bad leaver (resignation early, breach, dismissal for cause) at the lower of cost and fair value, with the valuation method stated and the payment terms spread where the company cannot pay at once; compulsory transfer provisions need to be in the articles to bind the shares, which is why the agreement comes with a note on the articles and amended articles are quoted separately.

Vesting, death, incapacity and divorce

Vesting, under which a founder's shares are earned over a period and unvested shares can be bought back for nominal value if they leave early, protects each founder from the other walking away with half the company after six months; on death, the agreement should provide for the surviving founder to buy the deceased's shares from the estate, funded by life cover if the founders choose, and on long-term incapacity for a similar purchase; on divorce, a court can take a founder's shares into account under section 25 of the Matrimonial Causes Act 1973, and the agreement's transfer restrictions and valuation help keep the shares, and the other founder's position, intact.

Selling the company and the articles

The agreement should provide that a sale needs both founders, or that an offer accepted by one at a stated minimum price drags the other along on the same terms, with a tag-along so that neither can sell their half without the buyer offering for both, and should address restrictive covenants on each founder for a period after they leave, confidentiality, and the relationship between the agreement and the articles: the agreement binds the two founders as a contract, the articles bind the company and every future shareholder under section 33 of the Companies Act 2006, and changing the articles needs a special resolution under section 21, which with equal shares needs both founders.

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

We are fifty-fifty and get on well. Why do we need an agreement?

Because the day you stop agreeing, neither of you can pass a resolution and nothing in the law breaks the deadlock. The agreement sets the mechanism while you can agree what it should be, and deals with a founder leaving, dying or divorcing before any of it happens.

Does the agreement stop my co-founder selling their shares to someone else?

With the transfer restrictions and pre-emption rights it contains, and the matching provisions in the articles, yes: a founder must first offer their shares to the other. The note on the articles says whether yours need amending to make that bind.

Do you act for both of us?

I act for both of you jointly: the agreement is drafted for the two of you together, after a briefing session with both. If your interests diverge on a point, I say so, and either of you can take separate advice on it.

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
• Getting an AI-drafted shareholders agreement checked

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.