The agreement and the constitution must say the same thing. Where they conflict, the constitution generally governs the company’s internal affairs while the agreement binds the parties contractually — which produces a valid resolution that is simultaneously a breach of contract. Amend both together, every time.
Shareholders’ Agreement
Between the Company and its shareholders
The agreement and the constitution must say the same thing. Where they conflict, the constitution generally governs the company’s internal affairs while the agreement binds the parties contractually — which produces a valid resolution that is simultaneously a breach of contract. Amend both together, every time.
| Item | Detail |
|---|---|
| Company | [COMPANY NAME], UEN [UEN] |
| Founders | [NAMES] |
| Investors | [NAMES] |
| Date | [DATE] |
| Share classes | [Ordinary; Series A Preference] |
| Board size | [4] — [2] founder, [1] investor, [1] independent |
| Investor consent threshold | [Holders of a majority of the Preference Shares] |
| Drag-along threshold | [Holders of ______ per cent and the Investor Majority] |
| Constitution amended to match | [DATE] |
| Governing law | Singapore |
1. Relationship with the Constitution
1.1The parties shall exercise their rights so as to give effect to this agreement, and shall procure that the constitution is amended to be consistent with it.
1.2As between the parties, this agreement prevails over the constitution. As regards the Company’s internal affairs and third parties, the constitution governs.
1.3Any amendment to this agreement requiring a corresponding change to the constitution shall be made at the same time.
1.4Inconsistency between the two is among the most common findings in due diligence, and it usually arises because the constitution was left as the Model Constitution while a bespoke agreement was negotiated alongside it.
2. Board
2.1The Board shall consist of [4] directors: [2] appointed by the Founders, [1] appointed by the Investor Majority, and [1] independent director appointed by agreement.
2.2At least one director shall be ordinarily resident in Singapore at all times.
2.3A party appointing a director may remove and replace that director by written notice.
2.4The quorum is [2] directors, of whom at least one shall be an Investor Director, provided that if a quorum is not present at two consecutive properly convened meetings, the quorum at the next shall be any [2] directors.
2.5The Board shall meet at least [quarterly], on not less than [7] days notice, with papers circulated in advance.
2.6[Investor observer] The Investor may appoint one observer to attend Board meetings without voting.
6 more pages in the Word file
This is page 1 of the Word document, exactly as it appears when you open it. Fields shown like THIS are placeholders for you to complete.
These notes accompany the template and explain the drafting choices, the compliance points and the mistakes most often made with this document. They appear as a final page in the Word file, intended to be deleted before the document is executed.
The agreement binds the parties contractually; the constitution governs the company. Where they diverge, a resolution can be validly passed under the constitution while breaching the agreement. Amend both together — and note that the Model Constitution applies by default if none is registered, which is almost never what a company with investors wants.
Board seats are visible; reserved matters are what determine who can actually do anything. A minority investor with consent rights over budgets, hiring, borrowing and material contracts controls the business. Set the thresholds high enough that ordinary operations do not require consent, and review Schedule 1 line by line.
Clause 3.2 treats consent as given if not refused within ten business days. Without it, an investor who has become unresponsive — fund wound down, partner departed, simply disengaged — can stop the company acting at all. This is a small clause that prevents a serious problem.
Tag lets minority holders join a sale on the same terms. Drag lets a defined majority compel everyone to sell. Both are standard. What matters is the drag threshold — who can trigger it, and whether the investor alone can force a sale founders do not want.
Clause 6.6 restricts a dragged party to warranties on title and capacity, with several and capped liability. Without it, a minority holder can be compelled to sell and then give full business warranties on a company they do not run. Founders and small holders should insist on this.
Clause 6.4 makes a transfer in breach of tag-along void rather than merely a breach of contract. A damages claim against a founder who has already sold and left is a poor remedy; blocking the transfer is a real one.
A quorum requiring an Investor Director means the investor can block every board meeting by not attending. Clause 2.4 includes a fallback after two failed meetings, which is the standard answer. Without it, attendance becomes a control right nobody negotiated.
Schedule 4 sets the order of distribution on an exit. A participating preference means the investor takes its money back **and** shares the balance, which at modest exit values can leave founders with very little. Run the numbers at several exit values rather than only the optimistic one.
A shareholder who has not acceded is not bound by transfer restrictions, drag, tag or information provisions. Clause 6.7 makes adherence a condition of an effective transfer. This is the provision most often skipped on small transfers and option exercises.
Share transfers attract stamp duty and must be stamped within the prescribed period; an unstamped instrument is inadmissible in evidence. And because the register of members maintained by the Registrar is prima facie evidence of title for a private company, a transfer not lodged leaves the register wrong.
Clause 4.3 allows information rights to be suspended where a shareholder becomes a competitor — typically because an investor has backed a rival. Without it, the company must keep supplying management accounts to a competitor.
Restraints are enforceable in Singapore only so far as reasonable, and an over-broad covenant fails entirely rather than being read down. A twelve-month non-solicitation confined to customers and colleagues the founder actually dealt with is defensible; a broad non-compete frequently is not.
Buy-sell and shootout provisions sound even-handed and are not: the party able to fund a purchase controls the outcome. Take advice before including one, and consider whether mediation plus a clear reserved-matters list is sufficient.
Clause 10.3 requires consent from the Company, a founder majority and the investor majority. An amendment clause requiring only the investor majority allows the terms to be changed against the founders — check this in any draft presented as standard.
Reflects Singapore law and practice current as of {{DATE OF USE}}. VIMA publishes a model shareholders’ agreement that is a sensible starting point, market terms move, and requirements under the Companies Act 1967 including transfer, allotment and stamp duty change — take legal advice before signing, and model the waterfall before agreeing the preference.
This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, corporate secretary, or accountant as relevant) before you rely on it.