[Consulting]Drafting Shareholder Agreement

Startups often grant a certain amount of company stock to co-founders or early members. When a company distributes its stock to early members, they can work with a sense of ownership and, if the company's value increases later, the early members can sell their shares at a high price, providing an incentive to work hard for the company.

Therefore, distributing an appropriate level of company equity to a startup’s early members is a very important issue. On the other hand, when granting shares to early members, there is also a risk that they can freely dispose of the shares they receive or that they can move to another company while holding the company’s shares, which could threaten the company’s management rights. Therefore, when granting shares to early members, it is necessary to impose legal obligations on each other through a shareholder agreement to prevent risks such as the disposal of shares to third parties.

Company A’s founder sought Law firm Veat in order to draft a shareholder agreement to prevent founding members from transferring their shares to outsiders without each other's permission or leaving the company. Law firm Veat drafted a shareholder agreement that includes the condition that the founding members must work for the company and that the number of shares that can be disposed of gradually increases according to the period of employment, based on the opinions of Company A’s founder, while granting shares to the founding members.

In addition, it drafted a shareholder agreement containing priority purchase rights and stock return conditions, so that Company A can secure management rights stably and the co-founders can have motivation to grow the company.

Thank you.

Law firm Veat