A private contract among a company's shareholders that governs their rights and obligations beyond what is set out in the corporate bylaws, covering decision-making, share transfers, and dispute resolution.
When Blue Mountain acquires a stake in a company — whether majority or minority — the shareholders’ agreement is as important as the purchase contract itself. It is the document that defines how decisions will be made during the years of co-ownership, what happens if someone wants to exit, and how disagreements are resolved. Without a well-drafted shareholders’ agreement, any co-investment is a ticking time bomb.
A shareholders’ agreement (also called a stockholders’ agreement or, in Spanish practice, a pacto de socios) is a private contract among a company’s shareholders that supplements the corporate bylaws. While the bylaws regulate the basic mechanics of the company (share capital, corporate purpose, governance bodies) and are public, the shareholders’ agreement allows the parties to agree on additional terms on a confidential basis.
A shareholders’ agreement is particularly relevant when:
Governance and decision-making. Defines which decisions require unanimity, which require a supermajority, and which can be made by simple majority. Typically, the agreement reserves veto rights for the investor over critical decisions: transactions above a certain threshold, hiring or dismissal of key executives, borrowing above a set amount, dividend distributions, and changes to business strategy.
Tag-along (co-sale right). If the majority shareholder sells, the minority has the right to sell its stake on the same terms. This protects the minority from being left with a new partner they did not choose.
Drag-along (forced sale right). If the majority shareholder receives an offer for 100% of the company, it can compel the minority to sell on the same terms. This protects the majority from a minority shareholder blocking an exit transaction.
Pre-emption rights. If a shareholder wishes to sell, the others have the right to purchase the stake before it is offered to third parties. This prevents the entry of unwanted shareholders.
Anti-dilution. Protects existing shareholders against capital increases that would dilute their holdings without consent.
Dividend policy. Defines a minimum distribution percentage of net profit or objective criteria for deciding whether to distribute or reinvest. This is especially important when operational shareholders (who receive a salary) coexist with non-operational shareholders (whose sole return comes from dividends).
Exit mechanisms (put/call). Defines exit mechanisms for specific situations: serious breach of the agreement by one party, deadlock in decision-making, or the passage of a defined period. The exiting shareholder may hold a put (the right to sell at a determined price), and the acquiring shareholder may hold a call (the right to buy at a determined price).
Shotgun clause (Russian roulette). A deadlock resolution mechanism: one shareholder offers to buy the other’s stake at price X. The other shareholder can either accept the sale at that price or buy the first shareholder’s stake at the same price. It forces a fair price proposal, because neither party knows in advance whether they will end up as buyer or seller.
Non-compete and confidentiality. The shareholders commit not to compete with the company during their tenure and for a period after their exit, and to maintain the confidentiality of business information.
When a family office like Blue Mountain invests in a company and the founder retains a stake, the shareholders’ agreement defines the relationship during the co-investment years. The questions it resolves are concrete:
If these questions are not resolved in writing before the investment, they will be resolved by force — with lawyers, judges, and destruction of value.
Blue Mountain acquires 65% of an engineering firm with 50 employees and 10 million in revenue. The founder retains 35% and continues as technical director. The shareholders’ agreement establishes:
This structure allows both parties to coexist productively for four to five years, with clear rules for the exit of either party.
No. The bylaws are the company’s constitutive document — they are filed at the Companies Registry, are public, and bind the company and shareholders vis-a-vis third parties. The shareholders’ agreement is a private contract that only binds its signatories. Both are necessary: the bylaws for the formal structure, the agreement for the detailed rules of coexistence.
The shareholders’ agreement is a contract with full legal force between the parties. A breach entitles the aggrieved party to demand performance or claim damages. Many agreements include specific penalties for breach and an arbitration mechanism for faster resolution than ordinary courts.
Yes. Although you hold formal control as the majority, a well-drafted agreement protects your long-term interests: it secures the operational shareholder’s commitment to stay, establishes non-compete provisions, defines a clear exit mechanism, and prevents conflicts that can paralyse management. A shareholder dispute is costly regardless of who holds the majority.
If you wish to explore a potential collaboration or present an investment opportunity, we invite you to contact us. We guarantee absolute confidentiality in all our conversations.