Shareholders’ agreement – startup and investors
Shareholders’ agreement for a Finnish start-up raising a seed round: liquidation preference, drag and tag, pro rata and board seat, explained.
Sections of the template
Parties
- Company, founders and investors. The whole agreement is renewed in a financing round. Future shareholders also adhere to the agreement by signing an Adherence Agreement.
Definitions
- Prices and Investor Majority. The redemption prices, the preference and the investor consents rely on these terms. The definitions follow seriesseed.fi 4.0, where the Original Subscription Price is the original subscription or purchase price and the amount invested includes declared but unpaid dividends. In version 3.0 the Original Subscription Price is the original subscription price paid to the company, and no dividends are added.
Founders’ commitment and intellectual property
- Full-time commitment, IPR to the Company. An absolute requirement for investors. Without the IPR assignment, code or an invention may stay with an individual founder. Unless otherwise agreed, the assignee may not modify the work or transfer the right further (Copyright Act 404/1961, section 28). A founder who is an employee is always entitled to reasonable compensation for an invention, and this cannot be waived in advance (Employee Inventions Act 656/1967, sections 2 and 7).
- Part-time allowed, IPR to the Company. In the early stage, when the founders are still in day jobs. Record each founder’s minimum work input, because the Bad Leaver term and a breach of the commitment are assessed against it.
Assets contributed by the Founders
- Transfer without separate compensation. List the assets that were created before the company or are in a founder’s name: domain name, trademark, code, invention, materials and equipment. The list prevents a later dispute about what belongs to the company and what to the founder. The holder of a domain name or trademark must also be changed in the register.
Board and investor consent matters
- Investor board seat, seriesseed.fi veto list (recommended). Corresponds to the seriesseed.fi model (v3.0). The veto covers ownership, distributions and related parties, not day-to-day operations.
- Broad veto list (investor-friendly). Goes beyond the seriesseed.fi list into operations: the investor in practice runs the company. Strike out the contract and hiring items.
- Investor observer seat and narrow veto. For angel investors and small stakes. The investor has a veto on two matters only: amending the articles and selling the company. Rare when the investor holds more than 15%.
Exercising the veto
- Written request and time limit. Stops an investor from locking the company by staying silent. Ten business days is enough for ordinary matters. The investors may ask for longer if the matter is complex.
- Investors’ contact person. Without a contact person a request can go unnoticed, and in a dispute it is hard to show who it was addressed to. Name someone with authority to respond for the whole investor group.
- Reasoned and reasonable refusal. A veto protects the investment but is not a right to run the company. A duty to give reasons makes refusals accountable and helps resolve a dispute afterwards.
- Negotiation after a refusal. Gives a refusal a clear next step: negotiation and then dispute resolution. Whether the decision may be carried out during the dispute must be agreed separately.
- Urgent matters. Suits a company whose funding may run out quickly. The investors weigh the risk of a short time: three business days is tight.
- Veto lapses at a low holding. A veto protects the investment and is not meant to last for ever. A threshold stops a small remaining holding from keeping the veto.
Financing rounds
- A round approved by a qualified majority binds all. The principle of the seriesseed.fi models: a single shareholder cannot block a round approved by a qualified majority. A round directed to new investors requires a weighty financial reason (Companies Act 9:4).
Vesting
- 4 years, 1-year cliff, acceleration on exit (seriesseed.fi). Standard in the seriesseed.fi model (v3.0). Double-trigger acceleration protects the founder on an exit, and investors generally accept it.
- 4 years, 1-year cliff, no acceleration. Better for the investor: on an exit the buyer can dismiss the founder and redeem the unvested shares at the Original Subscription Price. Ask for a double trigger.
- No vesting. Only if all founders have already done their part. An investor will require vesting in any case.
Who is a bad, early or Good Leaver
- Resignation is Bad Leaver (seriesseed.fi 3.0). The seriesseed.fi 3.0 split, except that in 3.0 death is not a Good Leaver case: the others may redeem all shares at Fair Market Value. Resigning is Bad Leaver throughout the vesting period, even for family or health reasons. Note that from 1 January 2026 a proper reason is enough for termination on personal grounds (Employment Contracts Act 7:2), so the Bad Leaver threshold is lower than when the model was drafted.
- Resignation is Early Leaver (seriesseed.fi 4.0). The new middle category in seriesseed.fi 4.0: leaving is not a breach, but the leaver does not get Good Leaver status. Bad Leaver also covers an agreed departure if the facts would have justified dismissal.
- Bad Leaver only for serious breaches (founder-friendly). Bad Leaver requires grounds for cancellation, not mere grounds for termination, and resignation becomes Good Leaver after the Early Leaver period. An investor may ask for a longer period or the seriesseed.fi 4.0 split.
Redemption and prices
- Unvested only, Bad Leaver at subscription price (seriesseed.fi 3.0). The seriesseed.fi 3.0 pricing. The Fair Market Value mechanism is simplified to that of 4.0: in 3.0 it is set by a committee of two independent valuers from large audit firms. Vested shares are always safe, which is the founder’s most important protection. When the Company buys the shares itself, it acquires its own shares in a directed manner: this requires a two-thirds decision of the general meeting and a weighty financial reason for the company (Companies Act chapter 15, section 6, subsection 1). A purchase by the other shareholders is an ordinary share sale.
- Bad Leaver loses part of vested shares too, 25% of Fair Market Value (seriesseed.fi 4.0). The seriesseed.fi 4.0 pricing. A Bad Leaver loses much of the value of vested shares too, and an Early Leaver must sell all shares. A Good Leaver gets a better price than in 3.0.
- Bad Leaver loses everything at subscription price (investor-friendly). Harsher than either seriesseed.fi version: a Bad Leaver loses the value of all their work. A founder should not accept it.
- Vested shares stay, Fair Market Value except for Bad Leaver (founder-friendly). The mildest consequence: only a Bad Leaver sells at the Original Subscription Price. Investors rarely accept it, because the leaver gets fair value even for shares not yet earned.
- All shares at Fair Market Value. Suits a company without vesting: the leaver gets the value of their stake, and the remaining shareholders get rid of a passive owner.
Restrictions on share transfers
- Right of first refusal. A redemption clause in the articles (Companies Act 3:7) also binds those outside the agreement; the shareholders’ agreement binds only its signatories. Use both.
- First refusal and redemption in forced transfers. Keeps outsiders out of the company in unexpected situations too.
- Free transfer. Rare. Only if there are many shareholders and the shares must be tradable.
Drag-Along and Tag-Along
- Drag over 2/3 of shares, tag for all (seriesseed.fi 3.0). The seriesseed.fi threshold. A two-thirds majority means an investor usually cannot force a sale without a majority of the founders.
- Drag 2/3 always with Investor Majority, 60 days (seriesseed.fi 4.0). The investors always have a veto on a sale. The founders cannot sell without the Investor Majority, but the investors also need the founders unless they together hold 2/3 of the shares.
- Drag 2/3 with investor and founder majorities (balanced). Neither group can force a sale alone, even if one investor holds a large part of the shares. Suits a round where one investor is clearly larger than the others.
- Drag 50% plus Investor Majority (investor-friendly). Lower than seriesseed.fi: the investor together with one founder can sell the company. Founders should ask for a minimum price or a 2/3 threshold.
- Drag 75% and minimum price. Founder-friendly: prevents a cheap forced sale. Investors often accept it if the valuation floor is realistic.
Liquidation preference
- 1x non-participating (market standard). Market standard at seed stage (also in seriesseed.fi): the investor gets either its money back or its ownership share, whichever is greater, but not both. In a liquidation a preference to the assets requires a share class recorded in the articles of association (Companies Act 3:1).
- 1x participating (investor-friendly). The so-called double dip: the investor gets both its money back and its share. Founders should not accept it in a seed round.
- No preference. The model for angel investors and small rounds. Professional investors require at least 1x.
Pre-emptive rights and anti-dilution
- Pro rata for all, no anti-dilution (recommended). Fair to all. Protects the ownership share but not the valuation.
- Pro rata and broad-based weighted average. Acceptable anti-dilution protection: the adjustment is mild and takes the size of the round into account. Full ratchet is not acceptable.
- Pro rata for all, with seriesseed.fi 4.0 exceptions (founder-friendly). The founders can defend their ownership in every round. The option programme and acquisition consideration are excluded so that the right does not block ordinary issues.
- Pro rata for investors only (seriesseed.fi 4.0). The seriesseed.fi 4.0 model. The founders are diluted in every round unless they have a right of their own. Under the Companies Act all shareholders have a pre-emptive right, but it can be departed from in the articles of association or by a directed issue, which requires a weighty financial reason (Companies Act 9:3 and 9:4).
Information rights
- Monthly report and financial statements. A normal level of reporting. The investor needs the information for its own reporting.
Articles of association and investment agreement
- Articles amended to match, investment in a separate agreement. A shareholders’ agreement binds only its parties. Differences between share classes, such as a preference in distributions, must be recorded in the articles of association (Companies Act 3:1). The board seat is implemented here by a voting undertaking. If the investor appoints a member directly without a general meeting, that too must be recorded in the articles (Companies Act 6:9). The money and the subscription are agreed in the investment agreement, the owners’ mutual rights in this agreement.
Deadlock
- Negotiation, mediation and finally a sale. A stepped model: the last step makes agreeing worthwhile. Needed whenever a clause requires unanimity or someone has a veto.
- Independent chair decides. Quick. Requires a person everyone trusts. Not suitable for matters for which the law requires a qualified majority.
- Shotgun clause (offer to buy or sell). Works in a company with two equally strong shareholders: the offeror must price fairly because it may end up as the seller. Favours the one with more money. Not suitable when there is an investor or many small shareholders.
Non-compete
- Ownership period and 12 months (seriesseed.fi). Corresponds to the seriesseed.fi model (non-compete and non-solicitation, ownership period + 1 year), which binds only shareholders who work in the company. The investor is not bound, because its business is investing in several companies. For a shareholder who is an employee, chapter 3, section 5 of the Employment Contracts Act also limits the non-compete.
- Ownership period only. Lighter for the founder: the restriction ends once their shares are sold. Investors rarely accept this, because a departed founder could immediately set up a competitor.
Enforcement and power of attorney
- The board signs for a refusing shareholder. Without a power of attorney the redemption and Drag-Along terms would have to be enforced through court proceedings. Both seriesseed.fi models contain a similar power of attorney.
Material breach
- Redemption at Fair Market Value and damages. Applies to all shareholders, including those who do not work in the company. The leaver terms apply to breaches by a departing founder.
- Redemption at 50% of Fair Market Value (seriesseed.fi 3.0). The seriesseed.fi 3.0 consequence. Harsh, so keep the materiality requirement and the cure period. An unreasonable term may be adjusted by a court.
Confidentiality
- Agreement and confidential information. Both seriesseed.fi models contain a confidentiality clause. The three-year tail is a choice of this template.
Term and amendments
- As long as there are at least two shareholders. A shareholders’ agreement binds only its parties, while the articles of association bind everyone. The shareholders therefore undertake to bring the articles into line with the agreement.
Governing law and disputes
- Finnish law, district court. The cheapest and clearest option. Court proceedings are public and can take a long time.
- Finnish law, arbitration. Confidential and quick but clearly more expensive than a court. Suits a dispute whose publicity would be harmful. The FAI is the arbitration institute of the Finland Chamber of Commerce.
Signatures
- One copy each. Standard wording.
Shareholders’ agreement: what is normal and what is investor-friendly
A shareholders’ agreement binds only those who sign it. Redemption and consent clauses in the articles of association (Finnish Limited Liability Companies Act 3:7 and 3:8) bind everyone. Good practice is to use both. The seriesseed.fi models are a common starting point for seed rounds in Finland. The defaults of this template follow version 3.0 (Bird & Bird, 2020). Version 4.0 (Castrén & Snellman, 6 May 2026) is in several respects more favourable to investors, and its clauses are offered as options. “Investor-friendly” options go further than the models, “founder-friendly” ones stop short of them. The agreement is governed by Finnish law, and the Finnish version of this template is the original.
- Vesting over 4 years, with 25% after one year and the rest in 36 monthly instalments, is standard. Seriesseed.fi 3.0 includes double-trigger acceleration: everything vests if the company ends the founder’s employment or service after an exit for a reason not attributable to the founder. Resigning does not accelerate vesting.
- The leaver terms choose separately who is a bad, early or good leaver and at what price the shares are redeemed. In version 3.0 resigning is bad leaver, and the redemption covers only unvested shares. In version 4.0 resigning is early leaver, but bad and early leavers must also sell their vested shares, a bad leaver at 25% of fair market value.
- Bad leaver is tied to the grounds for termination and cancellation under the Finnish Employment Contracts Act (chapter 7, section 2 and chapter 8, section 1). From 1 January 2026 a proper reason is enough for termination on personal grounds (chapter 7, section 2, amendment 1390/2025), so mere grounds for termination are a lower threshold than before. The founder-friendly option requires grounds for cancellation.
- Drag-along: in version 3.0 the threshold is more than 2/3 of the shares and the notice lapses after 90 days; in version 4.0 the threshold is 2/3 and always the investor majority, with 60 days. The investor majority gives the investors a veto, and if one investor holds more than half of the investors’ shares, it decides alone. If one shareholder holds shares equal to the threshold, they can force the others to sell. A minimum valuation protects against a cheap forced sale.
- In seriesseed.fi 3.0 a sale of founders’ shares requires the consent of the investor majority for four years. Version 4.0 removed this lock-up, and these templates do not include it either. Add it to the transfer restrictions if needed. The right of first refusal applies to everyone.
- Liquidation preference: seriesseed.fi gives the investor the greater of 1x its investment or its pro rata share, that is 1x non-participating. A participating preference or a multiple above 1x is unusual at seed stage and expensive for the founders. In a liquidation the preference requires a share class recorded in the articles of association (Companies Act 3:1), and the investment itself is agreed in a separate investment agreement.
- Anti-dilution: broad-based weighted average is acceptable, full ratchet is not. Under the Companies Act all shareholders have a pre-emptive right to new shares, but it can be departed from (Companies Act 9:3 and 9:4). In version 4.0 the contractual pre-emptive right belongs only to the investors, so founders should ask for it as well.
- The investor veto list in the seriesseed.fi model: articles of association, share issues and redemptions, option programme, investor rights, dividends, mergers and exit, transfer of material assets, employment contracts of the managing director and founders, and related-party contracts. The budget, individual contracts and recruitment are not on the list.
- Assignment of IPR to the company and the founders’ commitment are absolute requirements for investors and in the founders’ interest too. A founder who is an employee is nevertheless always entitled to reasonable compensation for an invention (Employee Inventions Act 656/1967, sections 2 and 7). List the assets the founders bring in, such as the domain name, trademark and code written before the company, so that there is no later dispute about what belongs to the company.
- The power of attorney makes the redemption and Drag-Along terms work: if a shareholder refuses to sign, the board signs on their behalf. The voting undertaking on financing rounds prevents a single shareholder from stopping a round approved by a qualified majority.
- A non-compete for founders for the ownership period plus 12 months is common. An investor should not be bound by a non-compete. For a founder who is an employee, the Employment Contracts Act limits the restriction.
- Disputes: arbitration is quick and confidential but expensive. For a small company the district court is more realistic.
- Use of the veto: a veto protects the investment and is not a right to run the company. The clause Exercising the veto adds a written request, a time limit with deemed consent, a named contact person, a reasoned refusal and negotiation, so that an investor cannot lock the company by staying silent. These are additions to the seriesseed.fi models. The investors may ask for a longer time limit or drop the deemed consent, so agree the limits before the round.
Court decisions
- KKO 2020:34. Consent to a redemption given in advance in a shareholders’ agreement was not enough when the general meeting decided to redeem a departed shareholder’s shares at a price it set itself: the decision was invalid. If the leaver redemption is meant to work under company law as well, record the redemption term and the pricing method in the articles of association.
- KKO 1994:95. Siblings’ oral shareholders’ agreement on equal positions in a family company was binding 12 years later: dismissing one of them breached the agreement, and the damages were 400,000 Finnish marks. Agree in writing on the term, the grounds for termination and the exit mechanism.
- Helsinki Court of Appeal 2016:19. Majority shareholders negotiated the sale of their shares to an outsider without telling the minority and then exercised their call option on the minority’s shares before the sale was completed. The arbitral tribunal ordered them to pay about EUR 58 million in total, because exercising the option did not cure the breach of the tag-along right, and the Court of Appeal dismissed the actions to set the award aside. Finlex marks the decision as not final (appealed to the Supreme Court on 21 December 2016), and the Supreme Court has published no precedent in the case. Spell out the order of priority between tag-along, drag-along and option terms.
What to do
- Choose the version that fits: light without investors, startup before a financing round, startup and investors with the round.
- Go through every option marked investor-friendly and think about what it means if you leave the company or the company is sold cheaply.
- The shareholders’ agreement is the largest single financial commitment for a founder. Have it reviewed by a lawyer before signing.
Sources: Limited Liability Companies Act (624/2006) chapter 3, sections 1, 7 and 8, chapter 6, section 9 and chapter 9, sections 3 and 4; Employment Contracts Act (55/2001) chapter 3, section 5, chapter 7, section 2 and chapter 8, section 1 (Finlex, 22 and 25 October 2026); Helsinki Court of Appeal 21 October 2016 no. 1551 (Finlex, 25 October 2026); seriesseed.fi StartupTools FI Shareholders Agreement v3.0 (9 March 2021, github.com/seriesseedfi, CC BY 3.0), read 23 October 2026; SeriesSeed 4.0 Shareholders Agreement and annotated version (Castrén & Snellman, Startup Foundation, 6 May 2026, CC BY 3.0), read 25 October 2026. Employee Inventions Act (656/1967) sections 2 and 7 (Finlex, 26 October 2026); Copyright Act (404/1961) section 28 (Finlex, 28 October 2026). Some options in this template are adapted from these models, which are licensed under Creative Commons Attribution 3.0 (creativecommons.org/licenses/by/3.0/). The authors of the models have not reviewed this template. Court decisions read in Finlex 23 October 2026. English version 26.10.2026; the Finnish version is the original.
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