Shareholder agreements: planning for deadlock before it happens

Two shareholders with equal stakes and equal votes is a common starting point for a joint venture. It is also the structure most likely to stall when the partners disagree on a budget, a key hire or an exit.

Deadlock is a drafting problem

The Commercial Companies Code gives shareholders very few tools to break a stalemate. Without contractual provisions, a dispute between equal partners often ends in court — or in a company that simply stops making decisions. The shareholder agreement is the place to solve it, and the time to do so is while relations are still good.

Tools that actually work

A staged escalation clause — from management to shareholders to an independent expert — resolves most disagreements. For the rest, buy-sell mechanisms such as a shotgun clause or a put and call option let one party leave on terms agreed in advance.

Agree the valuation method early

Every exit mechanism depends on a price. Fixing the valuation method — and who appoints the valuer — at signing removes the single most contested question from any future dispute.

This article is for general information only and does not constitute legal advice on any specific matter.