Founders disagree. The documents decide what happens next.
Why shareholder arrangements matter before the friendship does not.
Most founder disputes are not about a clause nobody can find. They are about a clause nobody wrote. Equity was split in a conversation. One person funded the company from a personal account. A third arrival was promised shares “once we raise.” When the relationship strains, memory is not a register.
The documents that matter are ordinary: the articles, a shareholder agreement, and a cap table that matches what was actually issued. They should say who decides what, what happens if someone stops working, how a deadlock is broken, and how a founder leaves without holding the company hostage.
Related-party payments are where trust usually cracks in public. If the company is paying a founder’s other business, that arrangement should be approved and recorded. Informal drawings feel harmless until an investor, a bank or a co-founder asks for the minutes.
Putting this in writing while everyone still wants the venture to work is inexpensive. Reconstructing it after a fallout is a dispute, often with the company’s own records incomplete. If you are incorporating, admitting a partner, or already sensing the alignment slip, agree the rules before you need them.
This note is for general information only and does not constitute legal advice or create a solicitor–client relationship. Full disclaimer.