I signed a shareholders' agreement without a lawyer: what are the risks?

You signed a shareholders' agreement urgently, using an online template or an investor's draft, without a lawyer's review. The problem: under French law, this agreement outside the articles structures governance, shareholder entry/exit and founder protection. Poorly drafted, it is often inapplicable, contradicts the articles or generates expensive disputes.

Why a shareholders' agreement is legally sensitive

A shareholders' agreement is a contract: it binds only its signatories (binding force of contracts, Civil Code, art. 1103 — see Legifrance) and cannot derogate from mandatory rules (Civil Code art. 1102 and 1162 — Legifrance). It complements the articles without replacing them. In practice:

• The articles take precedence in corporate affairs and against third parties; a conflicting agreement becomes unenforceable within the company, and its breach does not automatically invalidate decisions.
• In a SAS, the law allows considerable freedom in the articles (e.g. decision-making arrangements, C. com., art. L.227‑9 — Legifrance): placing a governance rule only in the agreement often makes it ineffective in practice.
• As the agreement is confidential and separate from the articles, it cannot be enforced against non-signatories (new shareholders, transferees) until they accede.

These points are confirmed by professional practice (Cabinet Obadia Achille ; Cabinet Lacombe Brisou ; Kelly Guilbert Avocat).

The 10 major risks if you signed without a lawyer

1. Invalid or unlawful clauses: disproportionate non-compete, absolute transfer bans, clauses contrary to public policy (C. civ., art. 1162 — Legifrance). Result: the clause is set aside, weakening the agreement.
2. Contradictions with the articles: priorities/majorities, SAS president's powers, vetoes… In a conflict, company practice follows the articles, not the agreement. See articles-related obligations on Service-Public Pro.
3. Ineffective key clauses (vesting, good/bad leaver, liquidation preference, drag/tag) through lack of precise definitions, thresholds and timetables. For the fundamentals, reread the truly essential shareholders' agreement clauses.
4. Unworkable governance: a veto right only in the agreement does not change decision-making rules in the articles (SAS: C. com., art. L.227‑9 — Legifrance).
5. Poorly calibrated remedies: without a penalty clause or coercive penalty payment, you are limited to damages (C. civ., art. 1231‑5 — Legifrance), sometimes insufficient to prevent a disputed transfer.
6. Unenforceability against new entrants: without a mandatory accession clause, an investor, BSPCE employee or transferee is not bound by the existing agreement. For entry/exit mechanisms, see the guide pre-emption vs approval in a SAS.
7. Decision-making deadlocks: unrealistic quorums, cross-vetoes, systematic unanimity thresholds → paralysis, minority/majority abuse and litigation.
8. Evidence and confidentiality: agreement not disclosed at meetings, complex specific performance, interim proceedings required (see procedural routes on Justice.fr).
9. Registration and tax: actual transfers of securities are subject to registration formalities and duties depending on company form; plan ahead if the agreement contains options/promises or organises transfers (Service-Public Pro).
10. Difficult revision: amending the agreement generally requires unanimity among signatories; without an amendment clause, post-fundraising adjustment is laborious (practice confirmed by Documentissime).

Case law to know (effects and remedies)

The Cour de cassation regularly recalls that a breach of the agreement does not cause automatic invalidity of corporate decisions or conflicting transfers: the primary remedy is compensation, while specific performance (substitution, compulsory buyback) requires strict conditions, notably the third party's knowledge of the breached clause and, in some cases, the beneficiary's intention (see notably Cass. com., 26 avr. 2017, n° 15‑18.113). Hence the importance of including a penalty clause, coercive penalty payment, arrangements for substitution and notification to third parties where possible.

How to put things right if you have already signed

1. Rapid audit: map sensitive clauses (governance, transfers, leaver, non-compete, penalties, accession). You can use our startup legal audit checklist.
2. Alignment with the articles: identify what must move into the articles (decision thresholds, specific voting rights in a SAS) and what remains contractual (confidentiality, non-compete).
3. Amendment + deed of accession: revise the agreement, have all current shareholders accede and anticipate future entrants (investors, BSPCE employees).
4. Effective remedies: add a measured penalty clause, a coercive penalty payment, and specify specific performance (substitution for breach of pre-emption rights).
5. Practical governance: set achievable quorums/majorities, limited vetoes and avoid criteria constituting abuse. If a shareholder plans to leave, read our legal advice on a founder's exit.
6. Anticipate fundraising: harmonise the agreement/articles with the terms funds expect (drag/tag, liquidation preference, BSA/BSPCE). To budget for revision, see the cost of a shareholders' agreement.

Technical clauses that must be secured

Leaver, vesting and founder retention

Precisely define good/bad leaver events, vesting timetable, buyback formula (price, discount) and competent body. For more detail, consult our good practices on the leaver clause.

Securities transfers: pre-emption, approval, drag/tag

Carefully define scope (covered securities, exceptions), process (notice, deadlines, evidence), remedy (enforceable contractual invalidity, substitution) and interaction with the articles in a SAS: see our guide pre-emption vs approval.

SAS governance

Specify what must appear in the articles (thresholds, special rights, committees) under C. com., art. L.227‑9 (Legifrance), and what may remain in the agreement (enhanced information, prior consultation).

Non-compete, confidentiality, non-solicitation

Legitimate objective, proportionate geography/duration, possible consideration: otherwise, the clause risks invalidity for excessive restriction of freedom to conduct business (C. civ., art. 1102 — Legifrance). Useful reminders are provided by practitioners (Kelly Guilbert Avocat).

Remedies and enforcement

Provide a penalty clause (C. civ., art. 1231‑5 — Legifrance), coercive penalty payment, a right of substitution for breach of pre-emption rights, and a suitable jurisdiction clause. In a dispute, first consider mediation (Justice.fr).

Quick compliance checklist

• Check no clause conflicts with the articles or Civil Code (Legifrance).
• Precisely define vesting/leaver, non-compete, pre-emption/approval (deadlines, arrangements, remedies).
• Have all current signatories accede and provide for new entrants; date and initial the document correctly.
• Insert an amendment clause (unanimity or qualified majority of signatories) and a proportionate penalty clause.
• Check registration formalities applicable to actual securities transfers (Service-Public Pro).
• Have a corporate lawyer review it to secure the agreement retrospectively (see law firm recommendations: Obadia Achille ; Lacombe Brisou).

For an overview of a startup's recurring legal needs, see our situations where a lawyer saves time (and avoids disputes).

Quick FAQ

Need a rapid audit of your agreement before fundraising? Start with our audit checklist, then have a specialist resolve sensitive points.