Insights/28 Apr 2026
Borenius’ Tech Blog: The Founders’ Shareholders’ Agreement – Governance Before Investors Arrive
Founding teams usually spend a lot of time on product strategy and equity splits, but considerably less on governance. Rightly so, as these are the things that determine whether the company gets off the ground. However, taking a little time to think through the founders' SHA is almost always worth it.
A shareholders’ agreement (SHA) between the founders converts early trust into clear rules. Founders naturally trust each other, and most governance questions will never need to be tested. But plans change, a founder's contribution can decrease over time and circumstances can move in directions no one anticipated at the start – and having agreed mechanisms already in place to accommodate such changes is what makes the difference when that happens.
A founders' SHA also serves a different purpose from an investor SHA. Investor documents are designed primarily to protect deployed capital through liquidation preference, anti-dilution mechanics, board representation and information rights. A founders' SHA is about commitment, continuity and aligned incentives between the people building the company. It should be drafted so that it can later be replaced or folded into an investor SHA without unnecessary disruption. If early funding comes through convertible loans or SAFEs rather than standard equity, investors will not yet need to be parties to the SHA, making a clean founder-only document even more important as a starting point. The Finnish Companies Act and the articles of association provide only a basic framework: board powers, general meeting rules and majority voting. They do not regulate the founders' working relationship in any meaningful detail. While the articles of association are public and relatively rigid, an SHA is private, more flexible and provides contractual remedies if expectations are not met.
What should be covered in SHA?
The biggest governance risk in any founding team is a founder who stops contributing while retaining equity. Vesting and leaver mechanics exist to solve that problem, keeping the cap table aligned with actual contribution and giving the company a workable path when a founder departs. The key questions are what happens on early departure, who can acquire the affected shares and at what price, and how good and bad leavers are treated differently. The mechanism also needs to be executable in practice, whether through a call option, a shareholder-to-shareholder transfer, or a company redemption of shares.
Beyond vesting, a well-drafted founders' SHA will typically address the following:
- Founder obligations: Expected time commitment, role definitions, limits on side projects, founder pay, and basic duties such as loyalty, confidentiality, and disclosure of conflicts. Vague wording about contributing “sufficient time” is rarely enough. If departure has serious consequences, such as a forced sale at a discount, the trigger must be tied to clear and verifiable conduct.
- Transfer restrictions: A right of first refusal, permitted transfers (commonly to a personal holding company) and an adherence obligation for any transferee. It is also important to distinguish between contractual transfer restrictions in the SHA and restrictions effective under law. If the goal is to bind third parties, the relevant terms may need to be reflected in the company’s articles of association as well.
- Decision-making and deadlock: Reserved matters should stay focused on what is genuinely important: new share issuances, M&A, annual budget, senior hires, and disposal of material IP.
- IP and confidentiality: For technology companies, IP ownership must be clear from day one: pre-existing IP, newly created IP and work done by contractors and advisers. A missing assignment is not just a legal risk but also a common diligence blocker.
- Restrictive covenants: Non-compete and non-solicitation obligations must be drafted with enforceability in mind, particularly where founders act in several roles at once – shareholder, employee and director. In practice, confidentiality, IP ownership, and non-solicitation tend to be more useful and easier to enforce, than a broad non-compete.
Common mistakes
Many drafting problems come from using the wrong template. A generic SHA often turns out to be an investor document in disguise, importing investor-friendly mechanics without a corresponding investor, while omitting the founder-specific issues that matter most – commitment, vesting and leaver provisions. The most expensive disputes usually arise from unclear leaver definitions, uncertain valuation methodology and poorly designed decision-making rules. If a clause is meant to work when things go wrong, it needs to be precise enough to operate under pressure.
A practical test
A useful way to test a founders' SHA is to run through the situations which could be encountered in the future. What happens if one founder leaves after six months? What if one founder blocks a sale of the company? What if shares are transferred to a personal holding company? If the agreement gives clear answers, it is doing its job.
A founders' SHA is not a sign of distrust. It is a practical tool for making sure that the company and the founding relationship can survive the kinds of changes that early-stage companies almost always face.
If you have any questions regarding this blog post, don't hesitate to contact our Venture Capital & Emerging Companies team.
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