Shareholder agreement in a private limited company – what should it include?

When several individuals or companies jointly own an ApS, it is highly recommended that a shareholder’s agreement be drawn up. Although there are no legal requirements regarding the content of a shareholders’ agreement, and it does not need to be registered with the Danish Business Authority, it is an important tool for ensuring clear rules between the owners. The shareholders’ agreement regulates the internal relationship between the owners and serves as a kind of alignment of expectations between them, helping to prevent future conflicts, misunderstandings, and disagreements.

An ownership agreement should always be tailored to the specific company and group of owners, as the needs and preferences may vary considerably depending on the ownership structure, industry, and the company’s stage of development.

Below is a review of a number of key topics that are often included in ownership agreements, but the list is not exhaustive:

Share capital

The shareholder agreement should describe how the share capital is distributed among the owners and how capital increases or reductions are to be handled. It may also be relevant to regulate whether new shareholders can be admitted and on what terms. This creates transparency and prevents disagreements about ownership shares and capital structure.

General meetings

It may be relevant to agree whether certain decisions require unanimity or a qualified majority, which by nature must be balanced against the provisions of the Companies Act on majority voting.

The company’s executive board

It should be defined who constitutes the company’s day-to-day management and how the CEO’s powers and responsibilities are distributed. If several owners are also directors, it may be necessary to clarify how decisions are made by the management and how disagreements are handled. This can advantageously be done in connection with any rules of procedure and the directors’ contracts.

Decisions

The owner agreement should specify which decisions require unanimity and which can be made by a majority. These may include investments, borrowing, hiring, or changes to the company’s strategy. This ensures that no owner can make significant decisions without the support of the others.

Deadlock

In companies with two owners with equal ownership shares (50/50), disagreement can lead to a standstill – a so-called deadlock. The owner agreement should contain mechanisms for resolving such situations, e.g. by involving a mediator, rotating the chairmanship, or mutual purchase/sale models. This ensures that the company can move forward even if the owners cannot agree.

Employment conditions and duty of loyalty

If the owners also work in the company, their employment conditions should be regulated separately in employment contracts. This may include salary, job duties, notice periods, and non-competition clauses. As a supplement to this, the owner agreement may contain provisions on duty of loyalty – i.e. that the owners may not act to the detriment of the company or engage in competing business.

Transfer of shares and right of first refusal

The owner agreement should regulate how ownership shares can be transferred – both voluntarily and compulsorily (e.g. death, divorce or bankruptcy). Pre-emptive rights are a common mechanism whereby the other owners have the right to purchase the shares before they can be sold to a third party. This protects the group of owners from unwanted co-owners. Similarly, price setting and procedure should be included in this section.

Subscription rights and purchase rights

It may be relevant to introduce subscription rights (the right to purchase new shares) or purchase rights (the right to purchase existing shares) – e.g. as an incentive for key employees or as part of an exit strategy. The ownership agreement should specify how and when these rights can be exercised.

Prohibition on selling to competitors

In order to protect the company’s business foundation, it may be appropriate to introduce a prohibition on selling ownership shares to competitors or persons with conflicts of interest. This can be combined with pre-emptive rights and approval requirements from the other owners.

Breach

The ownership agreement should define what constitutes breach of contract – e.g. breach of duty of loyalty, non-competition clauses or failure to contribute capital – and what the consequences are. This could be, for example, a right or obligation to sell ownership shares at a reduced price (bad leaver clause) or exclusion from the company.

Dividends

It is important to clarify how and when dividends are paid. Should this be done annually, and to what extent? Should there be agreement on distribution, or can the majority decide? A clear dividend policy can prevent conflicts and ensure that all owners have realistic expectations of returns.

A shareholders’ agreement is not just a legal document – it is a strategic tool that creates clarity, security, and predictability among the owners. Although there are no legal requirements for what a shareholders’ agreement in a private limited company must contain, it is crucial that it is drafted with great care and adapted to the company’s specific circumstances and ownership structure. A well-designed shareholder agreement prevents conflicts, establishes clear rules and ensures that all owners have a common understanding of rights, obligations and expectations, both in everyday life and in extraordinary situations such as withdrawal of ownership, disagreement or sale.

By addressing key issues such as capital structure, decision-making authority, deadlock, duty of loyalty, pre-emptive rights, and dividend policy, the agreement creates a solid foundation for professional and trusting cooperation. It is recommended to seek professional advice when drafting the agreement to ensure that all relevant issues are covered and that the agreement is both practical and legally sound.

A well-thought-out shareholder agreement is not only a protection against the unexpected – it is an investment in the company’s long-term stability, value creation and the joint success of the owners.

If you have any questions about the above, please feel free to contact Business Lawyer and Partner Thomas Hvid Kjær from Raadgiver.dk ApS at +45 71 99 06 10 or thomas@raadgiver.dk.

This article does not constitute and cannot replace legal advice. Raadgiver.dk ApS assumes no liability for any damage or loss, directly or indirectly, attributable to the use of the information provided in the article.