Shareholders' agreement: a guide for A/S owners

What is a shareholders' agreement (aktionæroverenskomst)?

A shareholders' agreement (aktionæroverenskomst) is a private agreement between two or more shareholders in a public limited company (A/S) that governs the relationship between the owners and sets rules for the transfer of ownership stakes, management and decision-making.

The term is used primarily for A/S companies, while corresponding agreements in private limited companies (ApS) are typically called ejeraftaler or anpartshaveroverenskomster. In practice the content is often the same, it is the company form that determines the terminology.

The shareholders' agreement is company law's "background agreement": the articles of association govern the relationship externally (towards authorities, creditors, third parties), while the shareholders' agreement governs the relationship internally, directly between the shareholders.

Why is the shareholders' agreement important?

The articles of association of an A/S are a public document. They contain the company's basic rules, but they are designed to be general and are available to everyone.

The shareholders' agreement, by contrast, is confidential and lets the shareholders agree matters they do not want made public:

• Who has a veto over which decisions?
• On what conditions can a shareholder sell their shares?
• What happens if two shareholders disagree on a strategic direction?
• What happens if a shareholder dies, goes bankrupt or is divorced?

Without a shareholders' agreement these questions are unresolved, and those are the situations that cost dearly.

Shareholders' agreement vs. ejeraftale: what is the difference?

	Shareholders' agreement (A/S)	Ejeraftale (ApS)
Company form	Public limited company (A/S)	Private limited company (ApS)
Ownership certificates	Aktier (shares)	Anparter
Companies Act	The Companies Act	The Companies Act
Public	Confidential	Confidential
Registration requirement	Not mandatory	Not mandatory

Both types of agreement have the same basic purpose and many of the same clauses. The primary difference is terminology and company form. If you are in an ApS, see our guide to ejeraftaler.

When should you have a shareholders' agreement?

Answer: from day one, if you are two or more shareholders.

Many shareholders postpone the shareholders' agreement because it can seem unnecessary when everything is going well. That is a classic mistake. The agreement's value shows precisely when things are not going well:

• A shareholder wants out
• A shareholder dies
• The shareholders deeply disagree on the company's direction
• An external investor wants in
• A competing offer arises

In all these situations it is too late to negotiate, the basis for agreement is already undermined by the conflict of interest. A shareholders' agreement from the start eliminates this problem.

What must a shareholders' agreement contain?

1. The parties and ownership

All shareholders' names, their current shareholdings and any classes of shares (class A shares with voting rights, class B without, etc.).

2. Decision-making and voting rights

• Ordinary decisions: simple majority
• Extraordinary decisions (for example admission of a new shareholder, sale of the company, amendments to the articles): does it require a qualified majority?
• Veto rights: do individual shareholders have a veto over specific decisions?

This is one of the most negotiated points. Minority shareholders typically want a veto over certain decisions; the majority shareholder wants freedom to act.

3. Distribution of dividends

• Is there a policy for dividend distribution?
• Do the shareholders prefer to reinvest rather than distribute?
• Do certain shares have special dividend rights?

4. Transfer restrictions

This is the core section of the shareholders' agreement in many disputes:

Right of first refusal: If a shareholder wants to sell, the other shareholders must have the opportunity to buy at the offered price before the sale can go to an external buyer.

Lock-up period: Shareholders cannot sell for a certain period (for example 3-5 years) to ensure stability.

Tag-along: If a majority shareholder sells, the minority shareholders can require to sell along at the same price and terms.

Drag-along: If the majority shareholders sell, they can require the minority shareholders to sell along, typically to allow a buyer to acquire 100%.

Good leaver / bad leaver: What happens if a shareholder leaves the company? On what conditions are they a "good leaver" (sells at market value) vs. "bad leaver" (sells at a lower price, for example in case of a breach of the agreement)?

5. Deadlock mechanism

What happens if the shareholders are equal (50/50) and deeply disagree?

A deadlock mechanism is a procedural rule for what happens in a tie. Options:

• Mediation or arbitration
• "Shoot-out" clause (Texas shoot-out): one shareholder sets a price, the other either buys at that price or sells at that price
• A time-limited crisis-management CEO

6. Confidentiality

The content of the shareholders' agreement is confidential. State explicitly that the shareholders may not disclose the agreement's content to a third party, not even to acquirers of shares, unless they simultaneously sign the agreement.

7. Non-compete

The shareholders should typically undertake not to run a competing business in the company's industry, for as long as they are shareholders and for a period after leaving.

8. Admission of new shareholders

What is required for a new shareholder to be admitted?

• Does it require unanimous approval?
• Must the new shareholder sign and accede to the agreement?

9. Personal dependence

Is the company dependent on specific shareholders' personal contributions (a founder with a key customer, a technical shareholder with critical knowledge)?

• What happens if they leave the company?
• Is there a key-man insurance requirement?

10. Resolution of disputes

State whether disputes are to be resolved by:

• Negotiation as a first step
• Mediation
• Arbitration (faster and more confidential than court proceedings)
• The ordinary courts

Arbitration is typically preferable for business relationships, as it is confidential and usually faster.

Common mistakes in shareholders' agreements

Mistake 1: No agreement The most common and most expensive mistake. "We are friends and trust each other" is not legal protection.

Mistake 2: The agreement is too vague "The shareholders must cooperate in good faith" is not a clear mechanism. Use precise terms and figures.

Mistake 3: No deadlock mechanism with 50/50 ownership 50/50 companies are by definition vulnerable to deadlock. Without a mechanism, many 50/50 companies end up in court.

Mistake 4: The agreement and the articles conflict The articles are public and govern the relationship with the outside world. The shareholders' agreement is private. Make sure the two documents are consistent, otherwise it is the articles that take precedence towards third parties.

Mistake 5: No follow-up with new shareholders A new shareholder is admitted but does not sign the agreement. Then they are not bound by it. Make acceding to the agreement a condition for receiving shares.

Shareholders' agreement and investors

If you take on an external investor (business angel, venture capital), they will almost always require to negotiate the shareholders' agreement. Investors have typical requirements:

• Liquidation preference: The investor gets their money out first on a sale
• Anti-dilution: Protection against dilution in future capital increases
• Information rights: The right to ongoing accounts and information
• A board seat or observer right

These requirements will typically require a revision of the existing agreement. Be prepared for it from the start.

Create your shareholders' agreement with LegalDock

LegalDock offers document templates for ejeraftaler and shareholders' agreements, updated with Danish company law. The template covers all the core points, from voting rights and transfer restrictions to deadlock mechanisms and confidentiality.

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Do you have two or more shareholders? Create your shareholders' agreement on LegalDock, and do not take the chance without an agreement in place.