Use Protection—Even in Business: The Shareholders’ Agreement You Can’t Afford to Skip

Use Protection—Even in Business

If you're a business owner and you're on Facebook or Instagram, you’ve probably noticed your feed being flooded with seminars, workshops, and ads about business structuring, partner disputes, or even dramatic stories like “how my partner kicked me out of my own company.”

Sounds like scare tactics, right? Well, it’s clever marketing, because it caught my attention too.

Having been in this industry for years, I’ve seen some wild situations. You wouldn’t believe the lengths some partners will go for just a few extra bucks. Here's the truth: partner disputes are real, and they happen more often than you think. It’s basically a business divorce (literally).

If you're a seasoned businessman, you probably already know the golden rule: Don’t start a business with good friends, family members, or ex-colleagues.

But if you're just getting started, full of energy and optimism, thinking “nah, that won’t happen to me” . It’s okay, I get it. But at the very least, protect yourself. Like wearing a condom (yes, also literally).

In the beginning, everything feels exciting. Everyone’s contributing, roles are flexible, goals are aligned. Then fast forward a few months (or years), and things start to unravel. Someone wants to leave. Another stops contributing. You’ve invested too much to back out.

Now you’re stuck, tired, frustrated, and wondering how it got so complicated. And yes ! by that point, it’s too late. Now you're regretting that you didn't use condom, i mean protection.

So let’s talk prevention. If you’re serious about your business, a shareholders’ agreement isn’t optional, it’s essential.

And to make it simple (because if I explain it professionally, I might have to charge you—HAHA), here’s my breakdown from real-life experience:

1. What Is a Shareholders’ Agreement?

A shareholders’ agreement is basically a legally binding document between the shareholders of a company that sets out.

• Who owns what

• Who does what

• How decisions are made

• What happens when someone wants to exit, stop contributing, or sell their shares

 Think of it as a business prenup. You hope you’ll never need it, but if you ever do, you’ll be glad it’s there.

2. When Do You Actually Need One?

 Let’s break it down :-

a. You’re starting a Sdn. Bhd. with friends or family

Everyone puts in money, time, or effort. You assume you’ll always be aligned until you’re not. Get things in writing early.

b. You have an investor

Whether it’s a silent investor or someone active, they’ll want their rights protected. And you should want yours too.

c. Only one person is running the show, but others own shares

Someone is working full-time. Others are passive. Don’t wait for resentment to build. Define roles and expectations clearly.

d. There’s no plan for what happens when someone wants out

Can a shareholder sell their shares to a stranger? Can they pass it to their spouse? You don’t want to deal with this when emotions are high.

e. You want to avoid messy exits or power struggles

Most disputes don’t start because people are greedy. They start because expectations weren’t clear from the start.

3. How will Shareholders’ Agreement Protect you

Among startups and SMEs, we often run our businesses based on trust and verbal agreements. That’s okay in the early days but as money, people, and responsibilities grow, so does the risk of misunderstanding.

Here’s what a shareholders’ agreement can protect you from:

• Ambiguity: Everyone knows their roles, rights, and what they’re entitled to.

• Unwanted shareholders: If someone wants to sell their shares, you can control who they sell to.

• Deadlocks: You can include mechanisms like mediation or buyouts when shareholders can’t agree.

• Exit strategy: Whether someone leaves, passes away, or stops contributing, you’ll know what happens next.

• Future-proofing: As your company grows, this agreement grows with you. You can always revise it, but having one is better than none.

4. My Two Sen

You don’t sign a shareholders’ agreement because you expect things to go wrong. You sign one because you  respect the people you’re in business with and you want to protect the relationship, the company, and the hard work everyone’s putting in.

So if you’re scrolling past those Facebook ads thinking, “That won’t happen to me”, take a moment to rethink. If your business means something to you, take the step now to put things in order.

As my ex-boss love to say:

“Think! Make it easy for me. Not harder for me !”