Shareholders’ Agreement for SMEs: Key clauses to protect company value

Shareholders’ Agreement

In many SMEs and family businesses, the relationship between shareholders works well… until it doesn’t. And the issue is rarely “bad faith”; it is usually the absence of clear rules when sensitive situations arise: an investor comes in, a shareholder wants to sell, a capital increase is needed, there is disagreement on dividends, management conflict emerges, or one shareholder’s life priorities change.

At that point, relying only on the articles of association and the Spanish Companies Act (Ley de Sociedades de Capital) is often not enough, because the law is a general framework, not a tailored suit.

That is where the shareholders’ agreement comes in: a private contract between shareholders that regulates what the articles of association typically do not detail and, above all, what you should not improvise when tensions rise. Properly designed, it operates as a risk-management tool: it reduces uncertainty, prevents blockages, organises entry and exit, and protects the company’s value when complex situations and disagreements appear.

What a shareholders’ agreement is and why it protects value

A shareholders’ agreement sets out arrangements between shareholders on key matters: corporate governance, transfer of shares/quotas, financing, dividends, management team retention, confidentiality, non-compete obligations, and exit rules. In SMEs, its usefulness is at its highest because ownership tends to be concentrated and the business often depends on specific people, commercial relationships, and fast decisions.

From a legal perspective, the general rule in non-listed companies is that “reserved agreements” bind the parties who sign them, even if they are not automatically enforceable against the company vis-à-vis third parties. Put simply: if a shareholder breaches the agreement, there can be contractual consequences (specific performance and damages), which is already a meaningful “wall” protecting value.

Shareholders’ agreement vs. articles of association: key differences

This distinction matters to avoid incorrect expectations and to draft the document properly from the outset.

The articles of association are the company’s “constitution”: they are filed with the Commercial Registry, are intended to be opposable, and regulate the basic organisation (share capital, corporate bodies, general transfer rules within legal limits, etc.). A shareholders’ agreement, by contrast, is a private arrangement governing the relationship between shareholders with more detailed and typically more flexible rules.

The practical difference can be understood through three ideas.

First, the articles look at the company and its institutional functioning; the shareholders’ agreement looks at the relationship between shareholders, where most value-eroding conflicts arise.

Second, shareholders’ agreements typically address areas that articles of association do not solve well: dividend policies, future funding rules, retention commitments, consequences of breach, deadlock mechanisms, or confidentiality and non-compete covenants.

Third, ideally, the shareholders’ agreement and the articles of association should be aligned. When structural matters are agreed (for example, meaningful transfer restrictions or enhanced majorities), it is often advisable to reflect them in the articles as well or implement them through formal corporate resolutions, so that the system is coherent and executable without friction.

In short: the articles are the public, basic framework; the shareholders’ agreement is the instruction manual for critical shareholder situations. They complement each other.

A shareholders’ agreement works best when it is grounded on a basic principle: clearly separating who decides (ownership) from who executes (management), and setting coherent incentives for both. If that separation is not well defined, recurring conflicts emerge: shareholder micromanagement, lack of autonomy for the management team, or strategic decisions taken without operational accountability.

If you want to explore this approach further, we recommend our article on aligning ownership and management, because it is the foundation for ensuring the agreement is not just “paper”, but a governance system that protects company value.

Essential clauses in an SME shareholders’ agreement to protect value

1) Corporate governance: agile decisions without anyone “holding the company hostage”

A typical source of value destruction is paralysis: decisions that are not taken, investments that are delayed, opportunities that are missed, conflicts that become entrenched and end up affecting customers, employees, and financing. A shareholders’ agreement must structure how the company is governed to avoid two equally dangerous extremes: requiring impossible unanimity for everything, or allowing a majority to impose structural decisions without control.

In SMEs, this is often achieved through enhanced majorities for “game-changing” decisions (sale of essential assets, high leverage, change of business activity, entry of investors, material corporate transactions) and simple majorities for ordinary course management. The goal is to preserve agility without giving up protection.

In 50/50 ownership structures or where minority blocking stakes exist, the agreement should also include deadlock mechanisms. The point is to accept that ties happen—and a business cannot remain frozen indefinitely.

Where needed, deadlock solutions may include:

• Mediation / independent tie-breaker: before escalating the dispute, the parties must go to a mediator or independent expert who proposes a solution.
• Shotgun / “Russian roulette”: a drastic solution for extreme cases; one shareholder sets a price and the other chooses whether to buy or sell at that price. It forces reasonableness in valuation.
• Deadlock buy/sell option: if certain conditions are met (time without agreement, critical decisions pending), an orderly exit right is triggered.

The objective is clear: avoid the company being immobilised and prevent conflict from destroying value through attrition.

Many times, shareholder deadlock is not about “who is in charge” but about a lack of reliable information: there is no consistent reporting, cash is not forecast, decisions are made without metrics, and each shareholder interprets the business differently. That is why, alongside the agreement, it is critical to professionalise the finance function and decision-making through data.

At Maraz Corporate Finance, we do this through our Fractional CFO / Financial Advisory services, implementing KPIs, cash control, budgets, and scenarios so that shareholder decisions are made with visibility—rather than intuition.

Rules for appointing family members to senior roles (family business)

In family businesses, a recurring source of conflict—and value loss—is the appointment of family members to positions of responsibility without clear criteria. To protect the company, it is advisable to separate ownership and management: being a shareholder or heir does not automatically entitle someone to an executive role.

A shareholders’ agreement (or, better, a family protocol coordinated with it) may set objective requirements: minimum education, prior external experience, a selection process, periodic evaluations, and transparent rules on appointment, performance, and remuneration. These clauses reduce internal tension, professionalise management, and prevent “family decisions” from jeopardising operations, financing, or a future sale.

2) Transfers of shares/quotas: selling well or selling under pressure (and the difference is value)

In a private company, value is not driven only by profitability; it is also driven by shareholder liquidity: how easy it is to sell without damaging the project or giving away price. Without rules, a shareholder’s exit can become chaotic: opaque negotiations, leaks, internal tension, opportunistic buyers, and—above all—the risk that the “new shareholder” is not a good fit.

Two key clauses should typically coexist in the agreement, because they protect both majorities and minorities:

• Drag-along right. If a buyer wants to acquire 100% (or a high agreed percentage) and the deal is good, the majority shareholder can require minority shareholders to sell on the same terms. This often maximises price because many buyers do not want a company with minorities who could later block decisions.
• Tag-along right. If the majority sells to a third party, the minority can join the sale on the same terms. This avoids the minority being “trapped” with a new controlling shareholder they did not choose, and ensures they benefit from the same price per share/quota.

In value-protection terms, the message is simple: drag-along avoids blockages that sink deals; tag-along avoids captive minorities. Both reduce risk and, therefore, increase the company’s attractiveness.

3) Pre-emption / right of first refusal: controlling who comes in

In SMEs and family businesses, the risk is not only that someone sells, but to whom they sell. A pre-emption right (tanteo and, sometimes, a right of redemption, retracto) requires the selling shareholder to offer first to the other shareholders or to the company before selling to a third party.

For it to work, the agreement must properly regulate the procedure: timelines, notice mechanics, payment terms, and a valuation mechanism in case of disagreement. Without that level of detail, the pre-emption right becomes a source of conflict rather than a useful filter.

4) Anti-dilution and capital increases: clear rules to fund growth

When new money comes in, the “pie” is reallocated. Anti-dilution clauses protect existing shareholders against excessive dilution, especially in future rounds at a lower valuation. This protection can be useful, but it must be calibrated: if it is too aggressive, it can make future capital injections unworkable.

In balanced agreements, the aim is to protect without suffocating: the company must be able to raise funding and grow. Anti-dilution makes sense when integrated into a broader logic of funding, transparency, and alignment of interests.

5) Lock-up, retention, and exits: protecting the most valuable asset, which is often the team

If value depends on a founder or a key operational shareholder, an early exit can seriously damage the company. That is why lock-up (retention) clauses and consequences for leaving before an agreed period—or breaching commitments—are commonly agreed.

In companies with working shareholders, it is also advisable to define what happens in orderly or contentious exit scenarios, to avoid internal wars that destroy value precisely when the business most needs stability.

6) Confidentiality and non-compete: protecting customer base, technology, and know-how

A departing shareholder may take sensitive information: pricing, margins, customers, strategy, suppliers. That is why confidentiality, non-compete, and non-solicitation covenants are common. The key is that they must be reasonable and well-defined, because disproportionate restrictions are often difficult to sustain.

7) Dividend policy: preventing the recurring conflict that wears SMEs down

In SMEs, dividend policy is a classic point of tension: some shareholders want to reinvest and others need dividends. If it is not agreed, the issue resurfaces every year and contaminates the shareholder relationship. A well-designed agreement sets criteria linked to cash availability, leverage, investment needs, and business stability. The goal is not to promise dividends always, but to create clear rules that reduce arbitrariness and conflict.

That protects value because it creates predictability, improves shareholder relations, and strengthens the company’s profile with banks and investors.

To prevent profit distribution from becoming an annual debate that drains the business, dividend policy should be translated into objective criteria: available cash, investment needs, leverage, and business stability. In other words, dividends are not only an “emotional” or preference-driven issue; they are a financial balance that directly impacts solvency and growth.

If you are interested in how to define that balance rigorously, you can also read our article on defining an optimal dividend distribution policy.

FAQ on shareholders’ agreements

Is a shareholders’ agreement mandatory for SMEs?
No. It is not mandatory, but it is highly advisable when there is more than one shareholder and, especially, where minorities exist, the company is family-owned, investors may enter, or a future sale is contemplated.

Is a shareholders’ agreement legally valid in Spain?
Yes, as a contract between its signatories. If breached, it may give rise to contractual liability. The key is drafting it clearly and aligning it with the articles of association and corporate resolutions to avoid practical friction.

Which clauses are essential to protect value?
It depends on the case, but almost always: governance (and deadlock where relevant), transfer rules (drag/tag), pre-emption rights, funding/anti-dilution rules where growth is expected, and dividend policy in family businesses or SMEs with “wealth” shareholders.

What happens if the shareholders’ agreement contradicts the articles of association?
It is usually a source of problems. That is why aligning both documents is essential. If the agreement covers structural matters, it is often advisable to reflect them in the articles of association or implement them through formal corporate resolutions.

Conclusion: from trust to certainty (and a more valuable company)

A shareholders’ agreement does not replace trust: it safeguards it. It converts potential conflicts into procedures, protects business continuity, and prevents blockages that cost opportunities, customers, and money. In an SME, clear rules on governance, transfers, and funding are among the most direct ways to protect entrepreneurial wealth.

At Maraz Corporate Finance, we help shareholders and management teams design shareholders’ agreements with a value-oriented approach, aligned with strategy, financial structure, and the most likely future scenarios (growth, funding, entry of investors, or a sale). Because well-ordered ownership is not bureaucracy: it is a competitive advantage.

Javier de Rojas Roca de Togores

Partner - Maraz Corporate Finance