Introduction: Beyond the Articles of Association
For most UK startups, the standard Articles of Association provided by Companies House are insufficient. While they offer a basic framework for corporate governance, they lack the privacy and specificity required for complex founder partnerships. A Shareholders' Agreement (SHA) acts as a confidential contract that defines exactly how the business is run and how decisions are made.
Dispute Resolution: Avoiding Founders' Deadlock
Disagreements are inevitable. Without a robust SHA, a 50/50 split between two founders can lead to a complete operational stalemate. At Logos Scribe, we draft bespoke Deadlock Provisions that provide clear pathways for resolution, whether through mediation, a "Texas Shoot-out" clause, or a chairman’s casting vote.
Essential Exit Strategies
When a majority shareholder wants to sell, or a minority shareholder wants to ensure they aren't left behind:
- Tag-along Rights: Protects minority shareholders by allowing them to join a sale of the company on the same terms.
- Drag-along Rights: Allows majority shareholders to force minority shareholders to join in the sale of the company, ensuring a 100% exit is possible for buyers.
Vesting Schedules: Protecting Company Equity
What happens if a founder leaves six months after launch? Without Reverse Vesting, they might walk away with a significant portion of the company's equity despite no longer contributing. We implement time-based or milestone-based vesting to ensure that equity is earned through long-term commitment to the startup's growth.
Conclusion: Draft Before the Investment Arrives
The best time to negotiate these terms is when everyone is in agreement, not when money is on the line. Logos Scribe provides meticulous legal review and drafting to secure your startup's future.
Consult our Drafting Experts