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Home / IP & Legal / Shareholders Agreement (SHA) (SHA)
Last updated: 2 October 2026
An SHA governs how shareholders make decisions, transfer shares and exit. Expertvuw’s team drafts and reviews SHAs for founders, investors and family companies, and aligns the Articles of Association so the rights are enforceable.
A shareholders’ agreement is a contract among a company’s shareholders (and often the company) setting out their rights and obligations beyond what the Companies Act, 2013 provides. It is common at fundraising rounds, in joint ventures and in family-owned companies.
Typical terms include board composition and nomination rights, reserved matters requiring investor consent, information rights, pre-emptive rights on new issues, anti-dilution protection, transfer restrictions such as lock-in, right of first refusal and right of first offer, tag-along and drag-along rights, founder vesting and non-solicit obligations, exit mechanisms and dispute resolution.
Indian courts have held that restrictions in an SHA should be incorporated into the Articles of Association to be binding on the company, so the AoA is usually amended alongside the SHA. Where investors are non-residents, FEMA rules on pricing and on guaranteed returns or assured exits apply.
Basis: Companies Act, 2013 (sections 5, 14 and 58); Indian Contract Act, 1872; FEM (Non-debt Instruments) Rules, 2019 (pricing and optionality); Arbitration and Conciliation Act, 1996. Last updated: 27 September 2026.
Decisions requiring specified shareholder consent.
Existing shareholders get priority on share sales.
Minority can join a sale; majority can require others to sell.
Protects investors in down rounds.
Rights should be incorporated into the Articles.
Non-resident investors cannot get assured returns.
SHA disputes usually surface at the next round or exit.
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SHAs connect with these services.
Terms among co-founders.
Amending the Articles.
Compliance for PE deals.
Preparing for venture funding.
Review agreed commercial terms.
Prepare the SHA.
Work through comments.
Amend the Articles to match.
Execute, allot shares and file forms.
FEMA reporting where applicable.
Run the company in line with the SHA.
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A contract among shareholders setting rights on governance, share transfers and exit beyond the Companies Act.
Key restrictions should be incorporated in the AoA to bind the company.
Tag-along lets minority shareholders join a sale; drag-along lets the majority require others to sell.
No. FEMA prohibits guaranteed returns or assured exit prices for non-resident investors.
Typically at fundraising, in joint ventures and in companies with several shareholders.
ACS – Director, Expertvuw Management Pvt Ltd
Agreements and policies are drafted by Expertvuw’s team for your review and negotiation. Where you need a legal opinion, dispute advice or representation, it is provided by independent advocates. Expertvuw is a corporate services company, not a law firm.