Shareholder Agreements: Why They Matter (Even Among Friends)
You’ve got a brilliant business idea.
Your co-founder? Your best friend.
Your early investors? Family members who believe in you.
Everything’s great — until it’s not.
That’s why a shareholder agreement isn’t just legal paperwork — it’s relationship insurance.
Let’s explore why it’s critical, even (and especially) when you trust each other.
1️⃣ Prevent Future Disputes
Startups move fast, and assumptions change.
✅ Who gets to make final decisions?
✅ How are profits split?
✅ What happens if someone wants to leave?
Example: Two friends launched a design agency without a shareholder agreement.
A year later, one wanted out, and they ended up in a messy, expensive legal fight over the company’s value.
2️⃣ Clarify Roles and Responsibilities
Even among close collaborators, clarity matters.
✅ Who is investing capital vs. time?
✅ Who is responsible for operations, sales, finance?
Example: A tech startup assumed equal work from all three co-founders —
but when only one person was actively managing the company, tensions flared.
A shareholder agreement can set clear expectations.
3️⃣ Protect Against Unexpected Exits
What if someone dies, becomes incapacitated, or simply walks away?
✅ A well-drafted agreement covers buyout provisions
✅ It defines how shares are valued and transferred
Example: A family business lost its majority shareholder unexpectedly.
Without an agreement, the company was thrown into chaos, delaying operations for months.
4️⃣ Support Fundraising and Growth
Investors love companies with clean paperwork.
✅ A solid shareholder agreement signals professionalism
✅ It makes your company more investable
Example: A startup struggled to close its seed round because investors were wary of unclear share structures and founder commitments.
5️⃣ Why Work With Paperwork.sg?
We:
✅ Help draft tailored shareholder agreements that match your business stage
✅ Work with legal partners to ensure enforceability
✅ Keep your company protected as you scale