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Updated: Apr 4

In Nigeria, startup agreements are crucial components of launching a successful business. These agreements typically cover matters such as equity sharing, intellectual property protection, ownership distribution, and investment terms.

One of the most common startup agreements in Nigeria is the shareholder's agreement. A shareholders' agreement is a legal agreement that defines the rights, responsibilities, and obligations of the shareholders in your company. This agreement helps to ensure that all shareholders are on the same page in terms of their investment, their role in the company, and their expectations for the future.

Your startup needs a shareholders' agreement for several reasons. Firstly, it would clarify how the business will be managed and operated. This includes defining the responsibilities and authority of the board of directors, the process for decision-making, and the role of shareholders in the day-to-day management of the business.

Shareholders' agreements also help protect the interests of minority shareholders. The agreement can include provisions such as tag-along rights, drag-along rights, or anti-dilution clauses that aim to prevent majority shareholders from unfairly disadvantaging minority shareholders.

Another reason why your startup needs a shareholders' agreement is that it provides a framework for resolving disputes. The agreement can include clauses that outline the process for resolving disputes, including mediation or arbitration. By providing a clear and agreed-upon process for resolving disputes, shareholders' agreements can help prevent costly and time-consuming legal battles.

The agreement can also help manage risks and provide stability. It can include provisions such as restrictions on transfer and pre-emptive rights, which aim to prevent investors from selling their shares to competitors or unknown third parties.

A Shareholders' agreement is an essential legal document for your startup as it provides clarity, protects the interests of shareholders, provides a framework for dispute resolution, helps manage risk, and provides stability in the management of the company.

Other common startup agreements in Nigeria include: