Shareholder Agreement
A contract among shareholders of a corporation that supplements the certificate of formation and bylaws by addressing matters such as voting, transfers, buy-sell rights, and dispute resolution.
A shareholder agreement is a contract among the shareholders of a corporation that supplements the certificate of formation and bylaws. Common provisions include voting agreements (requiring shareholders to vote together on specified matters), transfer restrictions (right of first refusal, drag-along, tag-along rights), buy-sell mechanics (mandatory purchase upon death, disability, departure, or dispute), valuation procedures (formula vs. appraisal), and dispute-resolution provisions (mediation, arbitration, forum-selection).
Shareholder agreements are particularly important in closely held corporations where the parties have negotiated for specific rights that go beyond the default rules of the corporate code. They also play a central role in family-business succession planning, where buy-sell mechanics determine how shares move between generations or branches of the family.
Permitted scope
Under § 21.101, the shareholders of a corporation may agree to arrangements that depart from the code's default rules. A qualifying agreement may, among other things, restrict or eliminate the board, govern distributions subject to § 21.303, allocate voting power, and authorize arbitration or another person to resolve deadlocks. It must be in the certificate of formation or bylaws approved by all shareholders, or in a written agreement signed by all shareholders and made known to the corporation, and it ceases to be effective once the shares are listed on a national securities exchange or regularly traded (§§ 21.101(b), 21.109). Transfer restrictions and purchase obligations rest on §§ 21.210–21.211.
Recent developments
Senate Bill 29 (effective May 14, 2025) added TBOC § 2.116, which permits the governing documents of a Texas entity to waive jury trial for internal entity claims, and amended § 2.115, the 2021 forum provision, to allow governing documents to name one or more Texas courts as the exclusive forum and venue. Both sections speak of governing documents, so they plainly cover an agreement placed in the certificate of formation or bylaws. SB 29 also added § 21.419, which sets presumptions favoring directors and officers, but only for a corporation with listed voting shares or one that opts in.