Almost every conversation about a shareholders' agreement starts the same way: how much does it cost? It is a fair question, and it deserves better than a figure pulled out of the air.
A shareholders' agreement is not a form. It is a contract tailored to a particular company, particular people and what each of them has put in, and its cost depends on how much work it takes to fit it to all that. Two founders starting with equal stakes do not need the same as a company with six partners, an investor coming in at the second round and a founder who wants to leave in two years' time. What follows explains what drives the price, what exactly you are paying for and what you save.
What drives the cost
The number of partners and what each brings. It is not the same when everyone contributes money as when one contributes money, another work and a third a patent. Each different contribution needs different rules: what happens if the partner contributing work stops doing so, how the patent is valued.
Whether there are, or will be, investors. A professional investor arrives with their own terms (liquidation preference, veto rights, drag-along) and those have to be negotiated. It is usually the part that takes most hours.
The clauses that are actually needed. Reinforced majorities, drag and tag along, founder commitment, non-compete, a partner's exit, what happens in a deadlock. A well-drafted agreement does not include them all as a matter of course: it includes the ones that company needs.
What has to go into the articles of association. This is often forgotten, and it is what matters most.
Why the articles change the sums
Article 29 of the Spanish Companies Act says that agreements kept private among the shareholders cannot be enforced against the company. Put simply: what is only in the agreement binds those who signed it, but the company may not be bound to respect it. So part of the work is deciding which clauses need to go into the articles, and amending the articles requires a public deed and registration at the Commercial Registry, with their own notary and registry fees.
Those need to be budgeted from the start. If someone quotes you for an agreement without mentioning the articles, ask why.
What exactly you pay for
Above all, you pay for judgement. Understanding how the company works and what can go wrong, proposing a structure, drafting it, explaining it to each partner, negotiating with the other side where there is one and revising the drafts until everyone signs. Drafting is only one part; the other is the conversation with the partners, which is where the disagreements surface that are best resolved before signing rather than after.
On top of that, where the articles have to be amended, come the notary and registry fees, which are not charged by the lawyer and depend on what is registered.
And what you save
This is where the sums change sign, and examples help.
Two partners at fifty per cent who stop getting on cannot approve anything: not the accounts, not an appointment, not a sale. Without a clause providing for a deadlock, the way out often runs through the courts or through winding up a business that was working. Expelling a partner on grounds not provided for in the articles is harder still, because adding a ground for exclusion later requires, under article 351 of the Act, the consent of every partner, including the one to be excluded. And a partner who leaves without a commitment or valuation clause can take their stake and their know-how to a competitor, at a price nobody agreed.
Any of those disputes costs far more, in time, money and lost business, than signing the agreement in good time.
When it is worth it
Whenever there is more than one partner, and above all at three moments: when the company is incorporated, when someone new joins the share capital and when one of the partners' role changes. That is when everyone gets on and everyone is willing to agree. A few years later is usually too late.
If you want to know what scope your agreement needs, in the thirty-minute initial consultation we go through it with you and tell you which clauses you need and which you do not, before you commit to anything.
Sources
- Spanish Royal Legislative Decree 1/2010, consolidated Companies Act, articles 29 (private agreements) and 351 (introducing and amending statutory grounds for exclusion).
This article contains general information for informative purposes and does not constitute legal advice or an investment recommendation. The rules cited may have been amended after publication; always check the text in force before taking a decision.