What is Consequences of not having a Shareholders Agreement?
Nexa Consultancy | Startup & Finance Glossary
Operating without a Shareholders' Agreement (SHA) is one of the biggest risks for a startup. It means there are no rules for decision-making, share transfers, what happens if a founder leaves, or how to resolve disputes. It can lead to deadlock and legal battles that can destroy the company.
Startup Example: Two 50/50 co-founders have a major disagreement. Without an SHA detailing a dispute resolution mechanism, the company is paralyzed and unable to make any decisions. No investor will touch a company in this state.
We consider drafting an SHA the most critical first step in our legal services.