14/08/2026
The fourth in our series of patterns we see from business owners who call us needing advice in distress: two co-founders started a business together — often mates or family. They didn’t paper things properly. Years later, when things got hard, or one wanted out, or wanted to be paid more, or to grow in a different direction, the relationship couldn’t survive the absence of structure.
By the time a dispute resolution lawyer gets involved, the business is being consumed by a shareholder dispute that eats the value out of it.
When two or more people start a business together, the dynamic at the start is almost always positive. Shared optimism, shared workload, shared upside. Nobody is thinking about deadlock, one is wanting out, or one stops contributing. Nobody is thinking about death, divorce, illness, or a fundamental disagreement about direction.
That’s understandable. Papering relationships properly at the start can feel premature. Like preparing for a divorce on the wedding day.
But the time to write the shareholder agreement is when you still like each other.
Here is what we see again and again. In the growth stage, things just work. That doesn’t always survive post-growth. One wants to grow aggressively, the other to keep it lean. One starts working less because life happens. One brings in their spouse and the other isn’t comfortable. One wants to sell their share. One dies, and now you’re in business with their estate.
Without a shareholder agreement, the Companies Act 1993 governs what happens next. It is fine as a backstop, but a poor substitute for what could have been agreed five years earlier.
The disputes we deal with often hinge on questions a shareholder agreement would have answered. How do we value shares on exit? Who gets dragged along if the other wants to sell? What happens if we cannot agree? How do we remove or remunerate a shareholder who becomes non-contributing?
Without an agreement, these get answered in mediation if you are fortunate, or in the High Court if you are not.
We get it. Paying a lawyer to draft an agreement about scenarios you cannot imagine feels like overhead. But it is the cheapest insurance you will ever buy.
So what should you be doing? If you started a business with a co-founder, get a shareholder agreement. Not next year. Now, while you still get along. If you signed one five or more years ago, read it again. Agreements that fit at start-up often do not fit at scale.
Build in clear mechanics for the things that destroy relationships under pressure: valuation on exit, pre-emptive rights, tag and drag, deadlock resolution, death, divorce, incapacity, and what constitutes a fundamental breach.
Have the awkward conversation early.
We don’t draft shareholder agreements. We resolve disputes. If you want to avoid talking to a lawyer like us, talk to one who will put this document in place.
Next in the series: personal guarantees, and what directors are actually on the hook for.
