Shareholders’ Agreement Without Investors

Note: The “Shareholders’ Agreement (without investors)” is the document formerly known as the “Founders’ Agreement”. We have renamed it to avoid confusion since it is, in fact, a shareholders’ agreement. We elaborate more on the sequential relationship of our shareholders’ agreements here.

When you join forces with your co-founders to start a new business, legal stuff is probably one of the last things you want to spend time on – especially the sometimes sensitive subject of commitment, cooperation and ownership. Nevertheless, agreeing on these topics from day one may be save you a lot of arguments and headache down the road. That’s why you should always have a shareholders’ agreement.

A shareholders’ agreement without investors is very similar to a shareholders’ agreement (SHA, Swedish: aktieägaravtal) with investors. It is still a SHA in the sense that it’s an agreement between the shareholders. Without any external shareholders some of the more important topics in the agreement are dedication, vesting, share transfers and decision-making (rather than regulating the relationship between founders and investors).

Standard Founders’ Agreement Terms

This is a very brief summary of some of the key terms in the complete founders’ agreement that you can download below.

Participation Right:The shareholders will have the right, but not the obligation, to participate in subsequent issuances of any equity securities on a pro rata basis.
Protective Provisions:A qualified founder majority is required to (i) amend the articles of association; (ii) issue, redeem or purchase shares or other equity securities; (iii) adversely change rights of the shares; (iv) declare or pay any dividend or make a decision on other asset distributions; (v) guarantee any indebtedness, save for trade accounts of the company, or incur any indebtedness in excess of SEK [amount]; (vi) merge, demerge, liquidate or dissolve the company or a subsidiary; (vii) transfer, lease, license (other than licenses granted in the ordinary course of business on a non-exclusive basis), pledge or encumber assets or rights material to the company; (viii) materially amend the business plan; (ix) hire, fire or amend the terms of the employment contract of the CEO; and (x) enter into any agreement or assignment with a shareholder or its immediate family member or any entity controlled by a shareholder and/or its immediate family member(s).
Board of Directors:Each founder shall elect one director.
Right of First Refusal:Transfer of shares in the company is subject to other shareholders’ right of first refusal.
Drag-Along:In the event a qualified shareholder majority accepts an offer to sell or otherwise transfer their shares to an independent bona fide third party, all other shareholders consent to sell or otherwise transfer their shares on the same terms and conditions as the majority shareholders who have accepted the offer.
Tag-Along:The shareholders shall have the right to participate in any sale or other transfer of shares in the same proportion and on the same terms and conditions as offered to the selling shareholder.
Vesting:Shares held by the founders will vest over six years as follows: 16.7% to vest one year after closing and the remaining 83.3% to vest in equal monthly installments under the following 60 months. During the vesting period, the founders may not transfer their shares without the approval of a qualified founder majority.

During the vesting period, any unvested shares of a founder who leaves the company may be purchased by the other shareholders pro rata at (i) quota value if the founder is a ”bad leaver”, or (ii) market value if the founder is a ”good leaver”.

Non-Compete and Non-Solicitation:Each founder is required to sign a non-competition and a non-solicitation commitment, valid until one year from the date he/she ceases to be an employee or a director of or a consultant to the company, whichever is the latest.
Intellectual Property:The founders shall assign all relevant intellectual property to the company.

For the complete version of the founders’ agreement, please download the document below.

/Erik Byrenius

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26 svar

  1. Hi, I’m Daniel and my co-founder and I are working to put together some legal groundwork for our start-up. I was wondering if you have any idea if these awesome documents would be applicable in other countries like Canada or USA? Thanks!

  2. Hi Daniel, I’m not sure, but I would guess that the legal frameworks in Canada and USA are too different from the Swedish one. That being said, the general principles of what you want to put in a shareholders’ agreement are probably the same. However, I think there might be too much work adapting them to Canada/US law so perhaps it’s better to find another standard instead. /Erik

  3. Tack Erik för att du delar med dig! Det här är väldigt värdefulla dokument för oss i startgropen.

  4. Tusen tack Erik. Väldigt hjälpsamt och högt uppskattat. Du råkar inte sitta på några mallar kring startup docs för letter of intent´s och convertible notes agreements? 🙂

  5. Hi Erik. My wife and I are English and about to lend / invest with my son and future wife in their first home near Stockholm. We have agreed to pay the 15% deposit but this will need to be paid back within 5 years and At that point the property will be valued and the 15% paid back as he has 2 brothers who may need help over time. We have discussed that this will be minus improvement costs they pay – such as mains water etc and that the minimum repayment should equal the initial 15%. Can you recommend what format this should take in Sweden to clarify the position and cover as many eventualities such as death or break up etc.
    Many thanks Colin.

  6. Who has the right to amend/terminate the founders agreement? If that is linked to the articles of association, what parts of the articles of association will tell us who has the right to amend the founders agreement? We have another articles of association than the one in your template.

  7. Hi Erik, does there need to capital in the business for founder agreement. I am starting a business with a friend and we have decided on 60/40. Can I use the founder agreement in this situation?

    1. Hi Stephen, the founders’ agreement is created for situations where you don’t have any investors. As long as you have a (Swedish) limited company with the legally required share capital it should be fine. As always, I recommend you to let someone who understands “legalese” double-check everything before you sign.

  8. Thanks for all the great info.

    If we want to have this done for a UK company. What should we think about?

  9. Hello,
    We are looking for a pre-incorporation founders agreement contract or Letter of business intent. Do you know of a template or guide similar to what you have provided in the above founders agreement?

  10. Hi,

    Can the Founders’ agreement also be used for a partnership (Kommanditbolag) as long as I change some paragraphs myself and adapt it a bit? Can the core still be used to to say or will it become ‘invalid’ if I change too much? I have no legal background myself.

    1. Hi Albin, I’m not a lawyer myself either but my guess is that a Kommanditbolag is quite different from an Aktiebolag. The overall issues to agree on in a shareholders’ agreement is more or less the same as in a partnership agreement but since a Kommanditbolag doesn’t have shares or shareholders, I think the actual wording has to be quite different from our template.

  11. Hi Erik!
    First of all, thanks a lot for the templates!
    One quick question, in the template the “Founder Majority” is defined by representing more than 75% of all the shares that are owned by founders. This means that in a 2,3 or even 4 persons (“strictly” more than 75%) team, majority means the whole team. Was that number (75%) intentional or simply random? Wouldn’t this lead to situations where no progress can be made as consensus is always required?

    1. Hi Bruno, the level for Founder Majority has to be discussed between founders. It is supposed to be a high threshold that should require all or almost all of the founders to agree. In many cases, not all founders have the same ownership, so even in 3 or 4 person founding teams, 75% may mean “all but one”. It’s too hard to set a level suitable for all startups, so make sure to think about it carefully yourselves.

  12. Hi, thanks for the great documents!
    – How can I wrote properly in the Founder Agreement that we are not working full-time currently, but that we have to make contributions to the company?
    – When someone gets 15% with 2 years vesting, can he get dividends before as we are just able to buy the shares back in case o leave?
    Thanks in advance!

    1. Hi Jen, no the documents are only available in English unfortunately. We would need a much bigger organization to translate and maintain all documents in all countries to local language. Unfortunately we don’t have the resources to do that.

  13. Hi,
    I will hire an employee in the founding team. Currently, I am the sole founder. The new team member will work without salary, but get equity instead. Which kind of documents/agreements that I should prepare for this employee to sign?
    Best regards,
    Nguyet Hoang

    1. Hello Nguyet!

      I will presume that you are located in Sweden? If you are not going to pay any salary at all, considering the person an employee may be difficult as that is generally a relationship guided around money in return for work/time. And QESO for example requires that you pay them a minimum of ~25kSEK/month to be eligible.

      It sounds more like you are looking to add a co-founder? In which case, look at our Shareholders’ Agreement Without Investors. There you have the option to decide who will get what % of ownership tied to vesting & criteria of how much work per month that is expected. If your company already has a high valuation, this may not be entirely without complications though. Keep in mind that this is entirely separate from employment.

      Drop me an email ( if you want to discuss more in depth, I can also put you in touch with a great law firm if you wish.

      Take care!

  14. Hi,

    great work, thank you!
    In this agreement, I am very worried about the Investor Majority Consent. Signing this agreement would mean that all important decision go to the investors, such as dividends, CEO hire, liquidation etc. The Investor Majority is defined as consent among all investors in the company; If you take in one investor, that person would have THE say; the Ceo could not take a loan above a certain threshold etc. Founder Majority consent looses is power completely (compare to founders agreements). I recommend to distinguish between decisions for investors, founders and where both can be involved (e.g. consent based on owned shares).

    1. Hello!

      I’m glad you like the documents! The concept of “investor majority” is not a part of the Shareholders’ Agreement without Investors (Founders’ Agreement) which this post is about. Which of the other shareholders’ agreements is it you’re referring to?

      Regardless – Yes, bringing in investors does transfer the ultimate say in some important decisions to the investors. Thank you for the proposal to “distinguish between decisions for investors, founders and where both can be involved (e.g. consent based on owned shares).”, I’ll have a look at what that might mean practically.

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