When two or more founders decide to start a company together, the excitement of building something new often overshadows a less glamorous but critical step, putting a proper shareholder agreement in place. Many early stage founders assume that a good working relationship and mutual trust are enough to avoid formal documentation, but this assumption is one of the most common causes of costly disputes down the line.
What a Shareholder Agreement Should Cover
A shareholder agreement sets out how decisions are made, how shares can be transferred or sold, what happens if a founder wants to leave, and how disputes between shareholders are resolved. Without one, founders are left relying on default provisions under the Companies Act 2016 or the company’s constitution, which rarely reflect the specific arrangement the founders actually intended when they started the business together.
Why Careful Drafting Matters
Experienced legal drafting matters enormously here, since a poorly worded shareholder agreement can be just as problematic as having none at all. Clauses around vesting schedules, drag along and tag along rights, deadlock resolution, and valuation methods for exiting shareholders require careful thought and a genuine understanding of how the founders intend to run the business. A lawyer who takes the time to actually understand the founders’ relationship and plans, rather than inserting boilerplate clauses, tends to produce agreements that hold up far better under real world pressure.
Finding a Lawyer Who Understands Startups
Founders often begin this process by searching for a lawyer near me who specialises in startup matters rather than general commercial work, since the nuances of founder agreements differ considerably from standard commercial contracts. A knowledgeable lawyer office near me will typically ask detailed questions about equity splits, roles, and expectations before drafting a single clause, ensuring the final agreement actually reflects reality rather than a generic template.
Firms like Toh Liew & Gentry, based in Solaris Mont Kiara, work closely with founding teams to draft agreements tailored to their specific business, walking through scenarios that founders may not have considered, such as what happens if a co-founder becomes incapacitated or wants to pursue a competing venture. Bringing in a trusted kl law firm before disagreements arise, rather than after, consistently proves to be the wiser and less expensive path for growing companies.
Local Citation
Business Name: Toh Liew & Gentry – Solaris Mont Kiara
Address: L-3A-09, No. 2, Jalan Solaris, Solaris Mont Kiara, 50480 Kuala Lumpur, Federal Territory of Kuala Lumpur
Phone: 03-6211 7117
Hours: Monday – Friday, 9:00 AM – 6:00 PM
Website: https://tlglegal.com.my/
Email: [email protected]