Sign a shareholder agreement online

Shareholder agreement versus articles

A company's articles of association, or bylaws and charter in the US, are its public rulebook. A shareholder agreement is a private contract between the shareholders, and usually the company, that adds rules the founders and investors do not want on the public register at Companies House or with the state.

Where the two conflict, the articles generally govern the company's own actions, while the agreement binds the parties who signed it. Good drafting keeps them consistent.

Clauses that matter most

These are the terms investors and founders negotiate hardest.

• Reserved matters: decisions that need investor or unanimous consent, such as issuing shares, taking on debt or selling the business.
• Pre-emption rights on new shares and on transfers.
• Drag-along, letting a majority force the minority to sell on the same terms, and tag-along, letting the minority join a sale.
• Good and bad leaver provisions for founders who leave, often linked to vesting.
• Deadlock resolution for 50/50 companies.
• Restrictive covenants on founders.
• Information rights for investors.
• A deed of adherence, so new shareholders sign up to the agreement.

Who signs and how

Every shareholder signs, individually or through an authorised signatory if the shareholder is a company or fund. The company usually signs too, through a director, so it is bound by covenants about information and consents.

In the US, some agreements in community property states ask a married shareholder's spouse to sign a consent so the spouse cannot later claim an interest that disrupts transfer restrictions. Ask your lawyer whether you need one.

Deeds, witnesses and e-signatures

Many shareholder agreements are signed as simple contracts. Some, especially where a party gives no consideration, are executed as deeds. In England and Wales, an individual signing a deed must do so in the presence of a witness who attests, and a company can execute a deed by two directors, or one director and the secretary, or one director with a witness, under section 44 of the Companies Act 2006.

An electronic signature on a deed is effective if the witness is physically present. In the US, Delaware and most other states accept electronic signatures on corporate documents, and section 116 of the Delaware General Corporation Law expressly allows them. Not legal advice: follow your lawyer's signing instructions on a funding round.

Common mistakes

A new shareholder who is issued shares but never signs a deed of adherence, and so is not bound by drag-along or leaver terms. Articles that were never updated to match the agreement. Signature pages collected by email from different drafts, so nobody can prove which version each person signed.

Signing a shareholder agreement with Sign PDF

Upload the final agreement, with its schedules, as one PDF. Sign PDF places a block for each shareholder and the company from the execution pages, plus witness blocks where they appear. Type 'every party initials each page' to add initials for all signers.

Because everyone signs the same sealed file, there is one signed version, not a pile of separate signature pages. The certificate of completion shows each signer's email, IP address, device and the time they signed, and the SHA-256 fingerprint of the original. Sign PDF does not file anything at Companies House or with a state registry.