Organization – The Shareholder Agreement

14 Jan ’10

I’m getting a lot of requests these days for information on and help with shareholder agreements, so I thought a post explaining what they are and how they work would be helpful.

Background

But before I start, I’d like to introduce you to two guys I suspect wish they’d had a shareholder agreement in place when they created their company: Craig Newmark and Jim Buckmaster, two of the three early shareholders of Craigslist. As I understand the case, the third shareholder decided to leave the company, and sold his shares to eBay. As far as I can tell, there was no shareholder agreement in place at the time, and so there was no transfer restriction on his shares, and presumably Craig and Jim had no right of first refusal to buy those shares before they were sold to eBay (I have no idea whether they would have bought them, but I assume so). Google “eBay Craigslist lawsuit” to see the (very expensive) results. Good times. For the lawyers. For Craig and Jim, not so much, I’m guessing.

(Incidentally, Jim keynoted mesh07 and was one of our favourite keynotes ever, and a very gracious guest.)

(Finish reading this post on Hyndman | Law).

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