Shareholders' Agreements: Why You Should Sign One from the Start

Key points:

• They supplement the articles of association to regulate key aspects of management and ownership.
• They prevent deadlocks and conflicts over financing, the sale of shares, or decision-making.
• They are private and confidential contracts, unlike the articles of association, which are public.
• Negotiating them with legal advice ensures their validity and protects the investment of all shareholders.

What is a shareholders' agreement and why are articles of association not enough?

When incorporating a company, it is mandatory to approve articles of association, which are filed with the Registro Mercantil (Mercantile Registry). However, the articles are often a standard document that merely complies with the minimum requirements of the Ley de Sociedades de Capital (Spanish Companies Act). They do not go into the detail of the relationship between the shareholders.

A shareholders' agreement (also known as a parasocial agreement) is a private contract signed by all or some of the shareholders. Its purpose is to anticipate potential scenarios and establish the rules of the game on matters that the articles of association cannot or do not usually regulate due to their public nature.

While the articles are "the law" of the company with respect to third parties, the agreement is "the law" between the signing shareholders. Not having one means leaving to chance issues as important as the sale of the company, the departure of a founder, or the resolution of a tie in a critical vote.

The lawyers in the ARROWS International network in Spain have extensive experience in negotiating and drafting these agreements, adapting them to the reality of each business project.

Essential clauses in a shareholders' agreement

A good shareholders' agreement is a tailor-made document. No two are the same, but there are certain clauses that are fundamental to protecting the business and the shareholders' investment.

Governance and decision-making

This defines who runs the company and how. Qualified majorities can be established for strategic decisions (e.g., selling a key asset, applying for a major loan, or approving the business plan).

This prevents a majority shareholder from making momentous decisions unilaterally or, conversely, a minority shareholder with veto power from blocking ordinary management.

Rules on the transfer of shares

This is one of the most critical parts. It regulates what happens if a shareholder wants to sell their shares. Without an agreement, a shareholder could sell their stake to a competitor. To avoid this, clauses are included such as:

• Pre-emption rights: This gives the remaining shareholders the right to buy the shares of the selling shareholder before any third party can.
• Drag-along clauses: These allow a majority shareholder, upon receiving an offer for 100% of the company, to force the minority shareholders to sell their shares under the same conditions. This protects against a minority shareholder blocking a sale.
• Tag-along clauses: These protect minority shareholders. If the majority shareholder sells their stake, the minority shareholders have the right to have the buyer offer to acquire their shares under the same conditions as well.

Commitments to remain and not to compete

In companies where value lies in the talent of the founders, it is vital to ensure their continuity. Lock-in clauses establish a minimum period during which key shareholders commit to remaining with the project.

Non-compete clauses prevent a shareholder who leaves the company from setting up a competing business or taking clients and employees for a specified period, thus protecting the company's know-how and goodwill.

Frequently asked questions about the clauses of the agreement

1. If the agreement contradicts the articles of association, which prevails? With respect to the company and third parties, the articles of association filed with the Mercantile Registry prevail. However, the agreement is a fully binding contract between the signing shareholders. If a shareholder breaches the agreement (even if their action is valid under the articles), the other shareholders can demand compensation for any damages caused.

2. Can a shareholder be forced never to sell their shares? No. A clause that imposes an absolute ban on the sale of shares would be void as it is contrary to law. What is valid and common is to regulate the conditions of such a sale, as is done with pre-emption rights or lock-in periods, provided they are reasonable.

Potential problems	How ARROWS (office@arws.eu) can help
Company deadlock: Shareholders cannot agree on a vital decision (e.g., a capital increase), paralysing the company.	Advice and negotiation: We help you design deadlock resolution mechanisms (mediation, arbitration, etc.) in the agreement to ensure business continuity.
Entry of unwanted shareholders: A shareholder sells their stake to a third party (even a competitor) without the others being able to prevent it.	Clause drafting: We include pre-emption, drag-along, and tag-along clauses to control who can become a shareholder and under what conditions.
Departure of a key shareholder: A founding shareholder leaves the project and starts a competing business, taking clients and knowledge with them.	Business protection: We draft valid and proportionate lock-in and non-compete clauses to protect the company's intangible assets.
Valuation conflicts: Disputes over the price of shares in the event of a shareholder's exit or the sale of the company.	Defining formulas: We establish clear and objective formulas in the agreement for valuing the company and its shares, avoiding future litigation.

Final summary

A shareholders' agreement is not an expense, but an investment in the long-term stability and viability of a company. Anticipating conflicts when the relationship between shareholders is good is much simpler and cheaper than trying to resolve them in the midst of a crisis. Omitting it exposes the company to deadlocks, costly litigation, and loss of control over the project.

For an entrepreneur, director, or investor, a well-drafted agreement is the primary tool for protecting their position and investment. Entrusting its design to the lawyers in the ARROWS International network in Spain is the best way to ensure a solid, balanced, and legally compliant agreement.

If you are thinking of setting up a company or want to formalise the relationship with your current partners, do not hesitate to contact us for personalised advice at office@arws.eu.

Frequently asked questions about shareholders' agreements

1. Is it mandatory to sign a shareholders' agreement? No, it is not legally mandatory, but it is highly recommended for any company with more than one shareholder. It is standard practice in the business and investment world.

2. When is the best time to sign it? At the time of the company's incorporation or when a new shareholder joins. This is when everyone's interests are most aligned and negotiations are smoother. Amending it later requires the agreement of all parties.

3. What happens if a shareholder does not comply with the agreement? It constitutes a breach of contract. The other signing shareholders can take legal action to demand specific performance of the agreement or compensation for the damages caused by the breach.

4. Is the shareholders' agreement filed with the Mercantile Registry? No. Its private and confidential nature is one of its main advantages. Only the signing shareholders are aware of its contents, unlike the articles of association, which are publicly accessible.

5. Is a shareholders' agreement also useful for a limited company with a share capital of €1? Yes, and it is especially important in such cases. In companies incorporated under Law 18/2022 ("Crea y Crece" - Create and Grow Act) with a minimal share capital, the real value of the project lies in the work and commitments of the shareholders. The agreement is the ideal place to regulate these.

6. Do I need a lawyer to draft a shareholders' agreement? Although it is not legally required, it is very risky to use generic templates. A specialist lawyer will ensure that the clauses are valid, tailored to your specific needs, and leave no loose ends that could cause problems in the future.

Disclaimer

Official sources reviewed

BOE consolidated legislation cited, the Spanish Tax Agency and, depending on the subject, the College of Registrars and applicable regional and municipal rules. Editorial review completed on 5 October 2026.

Disclaimer: The information contained in this article is for general informational purposes only and serves as a basic guide on the subject according to the legal situation in 2026. Although we take the utmost care to ensure the accuracy of the content, regulations and their interpretation evolve over time. ARROWS advokátní kancelář, the head of the ARROWS International network, is registered with the Czech Bar Association (its supervisory body) and holds professional indemnity insurance with a limit of CZK 400,000,000. To verify the current regulations and their application to your specific situation, please contact the ARROWS International network in Spain directly (office@arws.eu). We assume no liability for damages arising from the use of the information in this article without prior individual legal consultation.