A shareholders agreement (often an investors’ rights or voting agreement in US VC deals) sets contractual rules between equity holders in a private company.

How it works

Typical clauses include ROFR (right of first refusal on transfers), co-sale (tag-along if founders sell), drag-along (force minority to join an approved sale), board election rights, information and inspection rights, and registration rights for future IPOs.

The agreement sits alongside certificate of incorporation and stock purchase agreements. Charter holds economic terms (liquidation preference); shareholders agreement handles process and behavior.

Amendments usually need signatories from major holders — changing terms mid-company requires coalition building.

Why it matters

• Founders: Transfer restrictions block random secondary buyers. Plan liquidity with board and lead investor alignment.
• Investors: Agreements enforce pro rata, prevent hostile cap table entries, and streamline M&A by drag-along majorities.

Common mistake

Founders selling a small personal block without checking ROFR — the buyer may never close if existing investors exercise purchase rights.

Related ideas

• Drag-along
• Series vote
• ROFR, co-sale, and registration rights