If you incorporated an Irish company with a co-founder and you have not yet signed a Shareholders Agreement, you are running on a handshake. The Companies Registration Office filing tells the world you each own a percentage of the share capital. It does not tell the world — or each other — what happens if one of you stops working, what happens if one of you wants to sell to a third party, or what happens if you raise external investment. Those questions get answered in a Founder Shareholders Agreement, and the cost of answering them now is roughly 50x cheaper than answering them at exit. This page explains what the document does, what to put in it, and what to look out for.
What is a Founder Shareholders Agreement?
A Founder Shareholders Agreement is a private contract between the shareholders of a private Irish company governing their relationship as shareholders. It sits alongside the company’s Constitution — the public document filed with the CRO — but it is private to the parties. Where the Constitution sets out company-law matters that bind the company itself, the Shareholders Agreement governs the contractual relationship between the shareholders: who can buy and sell shares to whom, what happens on a leaver event, how the board is composed, what decisions need unanimous consent versus simple majority, and how exits are governed.
Why every Irish startup needs one
Three concrete failure modes that we see repeatedly. First: a co-founder leaves after eight months of work and keeps their 50% equity stake, because nothing said it should vest. Two years later that ex-founder is unreachable and any new shares the company wants to issue get diluted by both remaining founders. Second: an external party offers to buy out the company at a strong multiple, and a minority shareholder refuses to sell because there is no drag-along clause to compel them. Third: a founder wants to sell their shares to a friend at a friendly price, and the other founder has no pre-emption right to buy first or block the transfer.
All three are entirely preventable with a properly drafted €249 Founder Shareholders Agreement. The cost of unwinding any one of them at exit time runs five figures in legal fees alone, and that is before opportunity cost.
What goes in a Founder Shareholders Agreement
The six core sections any well-drafted Founder Shareholders Agreement should cover are: cap-table and share-class definition; vesting schedule with leaver provisions; board composition and reserved matters; pre-emption rights; transfer restrictions; and drag-along / tag-along rights for exit events. The detail in each section depends on the company stage and the founders’ preferences, but the section headings are essentially fixed.
Vesting and leaver provisions
The single most-skipped section. Founder vesting normally follows the standard venture pattern: four years with a one-year cliff. Until the cliff date, the leaver vests zero shares; from the cliff date onward, the leaver vests pro-rata monthly for the remaining 36 months. On a leaver event before full vesting, unvested shares are bought back by the company at a nominal price (often the original subscription price).
Leaver provisions distinguish good leaver — death, permanent disability, mutually-agreed departure — from bad leaver — voluntary resignation before vesting completes, dismissal for cause. Good leavers typically keep their already-vested shares at fair market value. Bad leavers are bought back at nominal value or original subscription price. The drafting nuance is in defining “for cause” without giving either party an unreviewable veto over the other’s equity.
Founder vesting is closely related to our standalone vesting agreement pack, which can be used to retrofit vesting onto a company that incorporated without it.
Board composition and reserved matters
For two co-founder companies, the standard pattern is a two-director board with both founders. Decisions that bind the company are taken by simple majority — but with a list of “reserved matters” that require unanimous consent, things like issuing new shares, taking on debt above a threshold, hiring or firing a CEO, selling the company, or amending the Constitution. Reserved matters protect minority shareholders from majority overreach. The trade-off is that they create deadlock risk, so most agreements pair them with a deadlock-resolution mechanism — typically a forced buyout at fair value, or a Texas shoot-out structure.
Pre-emption rights and transfer restrictions
Pre-emption protects existing shareholders against dilution: when the company wants to issue new shares, existing shareholders get the first right to buy their pro-rata portion at the same terms before the shares are offered to outsiders. Transfer restrictions protect against unwelcome new shareholders: when one founder wants to sell, the other founders get the first right to buy at the offered price before the shares can transfer to a third party. Both are non-negotiable in any well-drafted founder agreement.
Drag-along and tag-along rights
Drag-along compels minority shareholders to sell on the same terms as a majority — typically triggered when 75% or more of the share capital agrees to a sale. Tag-along entitles minority shareholders to participate in a sale on the same terms as a majority. Both are exit-event mechanics designed to prevent a single minority holdout from blocking a deal, and to prevent a majority from selling out and leaving minorities trapped at a depressed valuation post-exit.
Common drafting traps
Three patterns to avoid. First: copying a US-style shareholders agreement template wholesale onto an Irish company. The board governance, leaver mechanics, and tax-treatment assumptions are different — Section 128F of the Taxes Consolidation Act, the KEEP Scheme, and the Irish Companies Act 2014 do not match Delaware law and the document needs to be drafted against Irish statute.
Second: leaving the share valuation methodology vague — “fair value as agreed by the parties” works until the parties disagree. A buyout price formula referenced to revenue multiple, EBITDA multiple, or independent expert determination is more enforceable.
Third: using a pure-template service that does not coordinate with your company’s Constitution. Where the Constitution and the Shareholders Agreement conflict on company-law matters, the Constitution wins. Our cap-table legal health check picks up these conflicts before they become disputes.
Frequently asked questions
How much does a Founders Shareholders Agreement cost in Ireland?
OnlineLegalServices.ie drafts a complete Founder Shareholders Agreement for €249 fixed-fee — drafted by an Irish-qualified solicitor and tailored to your specific cap-table, vesting preferences, and leaver provisions. Equivalent agreements at full-service Dublin commercial firms typically range from €1,500 to €4,500 plus hourly amendments. The €249 fee covers two rounds of revisions; complex multi-class structures or cross-border shareholders are quoted separately in writing before any work begins.
When should two co-founders sign a Shareholders Agreement?
The week you incorporate. Specifically: before either founder has done meaningful technical or commercial work, before either has put cash in beyond the share-issue subscription, and before any third party has been promised equity. The longer founders wait, the harder it becomes to negotiate vesting and leaver provisions because by then both founders have something to lose. A 50/50 handshake at incorporation becomes a 50/50 dispute at exit.
What does a Founders Shareholders Agreement actually cover?
Six core areas: (1) cap-table and share-class definition; (2) vesting schedule for each founder, typically four years with a one-year cliff, sometimes accelerated on change of control; (3) leaver provisions distinguishing good leaver from bad leaver and the buyback price for each; (4) board composition, voting thresholds, and reserved matters; (5) pre-emption rights on new share issues and on transfers; and (6) drag-along and tag-along rights to govern minority/majority outcomes on exit.
Is a Founders Shareholders Agreement legally enforceable in Ireland?
Yes — provided it is properly executed (signed, dated, with consideration recited or expressed as a deed), consistent with the company’s constitution, and not contrary to general Irish company law. Where there is a conflict between the constitution and the shareholders agreement, the constitution generally prevails on company-law matters; the shareholders agreement governs the contractual relationship between shareholders. Both should be drafted to align — which is why our €249 service includes a constitutional-alignment review.
Can a Founders Shareholders Agreement include vesting?
Yes, and it should. Founder vesting is one of the most-postponed and most-regretted decisions in Irish startups. Without vesting, a co-founder who walks away after six months keeps their full equity stake — which then sits on the cap table as dead weight that future investors will require to be cleaned up. Standard four-year vesting with a one-year cliff is the market default for venture-backed startups.
Get your Founder Shareholders Agreement drafted
€249 fixed-fee for a Founder Shareholders Agreement drafted by an Irish-qualified solicitor against your actual cap-table — not a template. Two rounds of revisions included. Complex multi-class structures or cross-border shareholders quoted separately. Or book a 30-minute online consultation if you want to walk through your situation before committing. All pricing is published — no retainer, no hourly meter.