Most shareholders' agreements that reach our desk are well drafted on the incidental points and empty on the essential ones. They devote pages to definitions and confidentiality, and dispose in two lines of the only thing that will matter on the day of the disagreement: who decides, at what price someone exits, and what happens if someone breaches.
Before going further, a warning that surprises almost every founder: under article 29 of the Spanish Companies Act, agreements kept private between shareholders are not enforceable against the company. In other words, you can be right on paper and lose the vote at the general meeting. What is agreed outside the articles of association binds whoever signs it, not necessarily the company. The first technical decision is therefore not what is agreed, but where it is agreed.
1. Reinforced majorities: the list of what is not decided by simple majority
This is the clause that turns a minority stake into a defensible position. Without it, whoever holds 51% can increase capital, change the corporate purpose, sell the main asset or appoint a sole director without consulting anyone.
The usual mistake is copying a generic list. The useful list is the one written while looking at the specific business: if the company lives off a licence, the assignment of that licence goes on the list; if it lives off a contract with a client accounting for 40% of turnover, its termination does too. And a counterweight is needed: an over-long list does not protect the minority, it deadlocks the company and forces every ordinary decision to be renegotiated.
2. Drag along and tag along: what happens when a buyer appears
The drag-along right allows the majority to compel the minority to sell on the same terms; the tag-along right allows the minority to join the majority's sale. They always come as a pair, because they protect opposing interests.
What separates a good clause from a decorative one is its thresholds: from what percentage the drag along is triggered, what minimum price the offer must reach, whether the minority can be forced to give representations and warranties, and subject to what liability cap. A drag along with no liability cap turns a 5% shareholder into a joint guarantor of a transaction they did not negotiate.
3. Lock-in and non-compete: the value that walks out of the door
In companies whose asset is the knowledge of two or three people, the departure of one of them is worth more than any price clause. Hence the classic combination: a lock-in commitment, progressive vesting of shares, and a post-contractual non-compete.
Two practical cautions. First: a post-contractual non-compete must be limited in scope, territory and time and, where it affects someone who is also an employee, financially compensated; without that, its effectiveness is doubtful. Second: vesting must expressly address good-leaver and bad-leaver scenarios, because the argument is never whether someone is leaving, but how their departure is characterised.
4. Exit and price: the mechanism that keeps you out of court
This is the most frequently omitted clause and the one that saves the most litigation. It must answer three questions: who can force an exit, how the price is calculated, and within what period it is paid.
On price, a generic reference to “fair value” sows an expert-evidence dispute. It works better to fix the method in advance (a multiple on a defined metric, an average of several financial years, or a valuation by an appointed third party working to an agreed criterion) and to establish a deadlock-breaking mechanism: cross put and call options, or a shoot-out clause, where whoever sets the price risks ending up on either side of it.
And a fifth, when something sits outside Spain
If there is a shareholder, an asset or a vehicle in another jurisdiction, the effectiveness of the agreement stops being a drafting question and becomes one of governing law and jurisdiction. The same agreement can be fully enforceable under a continental system and seriously weakened under a common law one, depending on how the remedies for breach have been structured. That analysis is worth doing before signing, not when enforcement is already needed.
What to do with this
If you have a signed agreement, the useful review is not to read it end to end: it is to set out three scenarios (a shareholder wants to leave, a buyer appears, one of the two breaches) and check whether the document answers each with a concrete mechanism and a deadline. If it does not, you now know where the problem is.
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.