Seed and Series A Shareholders’ Agreement

For the first time, The Galion Project is publishing with the Bonnier Saint-Félix law firm a complete Shareholders' Agreement template, designed in the same spirit as the Term Sheet: balanced, annotated, open source. 

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The Galion Shareholders' Agreement is a Shareholders' Agreement template intended for Seed and Series A startups. Designed with the Bonnier Saint-Félix law firm, it includes the main clauses encountered during a fundraising round: governance, founder vesting, liquidation preference, tag-along, drag-along, anti-dilution (ratchet), information rights, and exit mechanisms. Annotated clause by clause, it allows entrepreneurs to better understand market standards before negotiating their Shareholders' Agreement.

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What you download

The Galion Shareholders' Agreement is available in two versions:

• The agreement, directly usable as a Word document, ready to serve as a basis for negotiation, with sections to be completed corresponding to the parameters to be negotiated for each transaction.
• An annotated version, formatted to help understand crucial points: important clauses are explained, structuring choices are identified, and our recommendations are provided to ensure balance and serve the company's best interests.
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What is the difference between a Term Sheet and a Shareholders' Agreement?

The Term Sheet summarizes the terms of an investment. It is generally non-binding. It establishes the main balances: valuation, preferential rights, governance. It's the promise.

The Shareholders' Agreement, on the other hand, formalizes these principles into a contract. It comes into effect at closing and governs the rights and obligations of all shareholders for the entire life of the company. It's the source code.

A misunderstood clause in the agreement can carry much more weight than a valuation point gained during Term Sheet negotiations. This template was designed to make this section readable, so you don't have to discover it at the wrong time.

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What are the essential clauses of a Shareholders' Agreement?

The document specifically covers:

• governance and the operation of the Board;
• simple and qualified majorities;
• founder exit mechanisms (vesting and leaver);
• co-sale rights (Tag Along);
• forced sale mechanisms (Drag Along);
• liquidation preference;
• anti-dilution protections (Ratchet);
• information and pro-rata rights.

The most crucial clauses are accompanied by comments that explain their logic, how they work, and their key considerations.

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Does this document replace a lawyer?

This template is not intended to replace lawyers. It was designed to help you work better with them.

The goal is to help you ask the right questions, identify key negotiation points, and differentiate between market standards and specific requests.

Each transaction has its own economic, legal, and strategic parameters. The bracketed elements must be adapted to your specific situation, and the entire document should be reviewed with your advisors.

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Why is The Galion Project publishing this document as open source?

Since its inception, The Galion Project has leveraged the collective intelligence of entrepreneurs to produce valuable resources for the ecosystem.

Like the Galion Term Sheet before it, this template aims to democratize access to best practices and contribute to a more transparent funding environment for founders.

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Frequently asked questions about shareholders’ agreements

What happens when a founder leaves the company?

Founders’ shares vest quarterly over 4 years. If a founder leaves before the fifth anniversary, half of the unvested shares can be bought back at nominal value by the remaining co-founders, and the other half by the company, to hire a replacement. Vested shares can be bought back at market value, with 20% paid upfront and 80% later: this is a Galion recommendation, to protect cash. Only gross misconduct allows all shares to be bought back at nominal value. Bonnier Saint-Félix points out that these clauses carry a tax and social security risk, and that vesting based on the date of departure, rather than its nature, is preferable. To prevent these situations, see our guide to co-founder relationships.

How does liquidation preference work in the Galion agreement?

It applies when more than 50% of the capital is sold. 10 to 15% of the sale price is first paid to all shareholders, regardless of share class, so that founders stay motivated even in a low-price sale. The investor then gets their money back. The rest goes to ordinary shares only: this is a “non-participating” clause. Bonnier Saint-Félix advises modelling these scenarios before signing. The mechanism is explained step by step in the Galion Term Sheet.

Can a shareholder be forced to sell their shares?

Yes, through the drag-along clause. If shareholders holding more than 75% of the voting rights accept an offer for 100% of the capital, the others must sell on the same terms. The sale must be completed within 120 days, and transaction costs are shared pro rata. In return, every shareholder has a full tag-along right if a buyer acquires more than 50% of the capital.

Who sits on the board, and which decisions require its approval?

The agreement provides for a statutory board: members proposed by the founders, one seat for the investor as long as it holds at least 15% of the capital, and an independent member chosen by mutual agreement. It meets at least four times a year. Sensitive decisions require a qualified majority: annual budget, sale or winding-up, dividends, debt above €200k, commitments above 20% of cash. To go further, see our Board guide.

How much equity should be set aside for employees?

The agreement sets aside 5 to 15% of the fully diluted capital for employees other than the founders, notably through BSPCE (French employee warrants). Beneficiaries do not sign the full agreement but a shorter contractual undertaking, appended to it. To grant these BSPCE, see our BSPCE Kit.

How long does a shareholders’ agreement last?

15 years, then it renews automatically for 5-year periods. It ends in the event of an IPO. Founders also commit not to sell their shares for 4 years, except in the cases set out in the agreement. When a shareholder sells, founders have a priority right of first refusal, ahead of the investor, so they keep control of the company.

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We designed this template as a working tool to help you better understand what you're signing, ask the right questions, and avoid costly misunderstandings years down the line.

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A big thank you to the Bonnier Saint-Félix teams for their expertise, insights, and essential contribution to this collective effort benefiting founders.

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About Bonnier Saint Félix

BONNIER SAINT-FÉLIX is a multidisciplinary Parisian business law firm dedicated to entrepreneurs, executives, investors, and creators. 

Its Corporate / Tax division specifically supports innovative companies at every stage of their development: governance, fundraising, structuring, management packages, M&A, and exit. 

Recognized for their agility and resolutely business-oriented approach, its teams act as true strategic partners for founders and investors, with a deep understanding of market practices and a constant objective: to secure growth without hindering ambition.

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