By the time a founder dispute reaches counsel, its outcome is usually already decided, it was decided years earlier, on the day the parties incorporated with standard Articles and agreed to "sort the details out later." Later has now arrived, and it has brought lawyers.
Why the Articles are not enough
Incorporation under CAMA 2020 gives a company Articles of Association, a public, largely generic constitution. What it does not give you is any answer to the questions that actually end business partnerships: What happens when we disagree and neither of us will move? How does one of us leave? At what price? And what happens to the shares of a founder who stops working but keeps holding?
Those answers live in a shareholders’ agreement: private, specific, and binding between the people it names. Four of its clauses do most of the work.
1. Deadlock, the divorce clause
Two equal shareholders who disagree completely can paralyse a company indefinitely. A deadlock clause chooses the resolution machinery in advance, escalation, mediation, casting mechanisms, or the buy-out devices lawyers have given cheerful names to distract from their seriousness. Which mechanism suits you depends on the shareholding structure and the parties’ relative depth of pocket; that a mechanism must exist does not depend on anything.
2. Exit, the door and its hinges
Pre-emption rights, tag-along protection for minorities, drag-along rights to deliver a clean sale. Without them, a shareholder can sell to a stranger you never chose, or a minority can block the sale of the whole company. The exit provisions are the difference between an orderly departure and a hostage negotiation.
You do not discover the quality of a shareholders’ agreement while everyone is friends. It is drafted precisely for the day they are not.
3. Valuation, the number nobody can agree on later
Every exit clause eventually reaches the same word: price. Agreeing the valuation method while nobody knows whether they will be buyer or seller is the only moment the negotiation is honest. Independent valuation, a formula, or a shotgun mechanism, chosen now, in writing, with the tie-breaks specified.
4. Vesting, the ghost shareholder problem
The co-founder who departs after eighteen months but retains thirty per cent haunts more Nigerian companies than any creditor. Vesting provisions, shares earned over time, with good-leaver and bad-leaver treatment defined, are how the company’s equity stays attached to the people building it.
The uncomfortable summary
None of these clauses is exotic, and none is expensive relative to what its absence costs. If your company has co-owners and no shareholders’ agreement, you have one, it is simply the default one, written by nobody with your interests in mind. Our commercial practice drafts and repairs these agreements; the repairs cost more.