Loopholes in Shareholder Relationships: What Do We Forget When Going into Business with Someone?

11.06.2026

After years of gaining experience in corporate environments, Matylda and Roman finally decided to pursue their dream of running their own business. They established a technology company intended to combine Matylda’s analytical mindset with Roman’s expertise in quality and safety management.

At the beginning, everything seemed ideal. Both were enthusiastic, they prepared the company’s articles of association with the help of ChatGPT, contributed equally to the share capital, and both joined the management board on equal terms. “We are mature people, we have known each other for years, we will always reach an agreement,” they kept saying.

They did not bother with any additional shareholders’ agreement, considering it unnecessary paperwork, a sign of mistrust, and an avoidable expense. They preferred to allocate their resources to business development rather than generating additional documents they believed they would never need.

The company entered the market successfully and achieved considerable financial success within its first year. However, significant profits soon brought fundamentally different visions for the company’s future.

Matylda felt that the company was gaining momentum. She wanted to reinvest most of the profits into new technologies and international expansion. Roman, who had recently purchased a house financed by a mortgage, expected regular distributions of substantial dividends. Moreover, he believed he had not left the corporate world only to work even harder. In his view, he had earned the right to slow down and finally enjoy the rewards of his previous efforts.

Disagreements also emerged regarding the level of commitment to the business. Matylda assumed responsibility for virtually all operational matters, handled crises, and regularly worked late into the night. Roman worked approximately fifteen hours per week, arguing that his role was now limited to “vision and strategy.” When Matylda pointed out that their arrangement regarding equal remuneration was no longer justified, Roman dismissed the discussion: “We are taking the same risk, everything is 50/50. My ideas are worth more than your spreadsheets.”

Management board meetings increasingly turned into arguments. Since each of them held 50% of the shares and voting rights, every key decision resulted in a deadlock. The company became paralysed—the shareholders were unable to approve even the purchase of a new server.

The final straw was a personal decision. Exhausted by the ongoing conflicts, Roman decided to take a six-month break and travel, leaving the entire business in Matylda’s hands. While working twelve hours a day, Matylda watched Roman continue to enjoy his entitlement to half of the company’s profits as a shareholder.

She concluded that it was time for a business divorce and proposed buying out his shares. Roman, fully aware that the company documentation contained no provisions regarding valuation methods or exit mechanisms, quoted a prohibitive price. He added that if Matylda was unwilling to pay it, he would seek a purchaser on the open market, forcing her to deal with an unknown third party as a future shareholder.

As a result, Matylda was left with virtually no amicable solution. Her only option was litigation – either filing a claim for the compulsory exclusion of a shareholder or seeking a court-ordered dissolution of the company. The problem is that, in the Polish legal environment, such proceedings often take years, consume substantial financial resources, and the risk of a forced liquidation of assets at a fraction of their value may irreversibly destroy a company’s achievements. Matylda found herself trapped in her own business.

Could Roman and Matylda have anticipated such a scenario? What should they have paid attention to when signing the relevant documents in order to protect their interests as effectively as possible?

A shared vision of the business at the outset is not enough. Standard constitutional documents do not regulate separation scenarios or the consequences of a shareholder withdrawing from day-to-day involvement in the company. To protect the business from paralysis, shareholders should execute, alongside the company’s constitutional documents, a separate confidential Shareholders’ Agreement (SHA). It is effectively a “prenuptial agreement for business,” setting out precise procedures to be followed in times of crisis.

Goodwill and mutual trust at the beginning provide the momentum needed to build a company. A Shareholders’ Agreement, however, ensures that a sudden change in the personal circumstances of one founder does not bring the entire business to ruin.

A professionally drafted agreement is not a sign of mistrust between business partners. On the contrary, it is the highest expression of business maturity and serves as a formal foundation guaranteeing the company’s operational stability regardless of circumstances.

A professionally prepared agreement should address six key areas:

Deadlock Resolution Mechanisms (Deadlock Provisions)

Clear procedures designed to prevent the company from becoming paralysed in a 50/50 ownership structure. This may involve appointing an independent arbitrator or contractually allocating decision-making authority (e.g., Matylda having the final say on operational matters and Roman on financial matters).

Predetermined Valuation Formula

A mathematical valuation mechanism (for example, based on an EBITDA multiple) expressly incorporated into the agreement. In the event of a dispute, the value of the company and its shares can therefore be determined immediately, eliminating subjective or unrealistic financial demands from either party.

Exit Mechanisms (e.g., Russian Roulette / Texas Shoot-Out)

Predefined separation procedures.

Under a Russian Roulette provision, Shareholder A presents Shareholder B with an offer specifying the valuation of the shares. Shareholder B then faces an irrevocable choice: either sell their shares at that price or purchase Shareholder A’s shares on exactly the same terms. Because the initiating party does not know whether they will ultimately lose control of the company or acquire full ownership, the mechanism discourages unrealistic, artificially low, or excessively inflated valuations.

A Texas Shoot-Out is a more dynamic variation resembling an auction process. Shareholder A offers to purchase Shareholder B’s shares at a specified price. Shareholder B may either accept the offer and exit the company with the proceeds or reverse the situation by submitting a higher counter-offer to acquire Shareholder A’s shares. The process continues until one shareholder withdraws and agrees to sell.

Drag-Along and Tag-Along Rights

Mechanisms governing transactions involving external investors.

A drag-along right prevents one shareholder from blocking the sale of 100% of the company’s shares. A tag-along right ensures that if one shareholder decides to sell their stake, the other shareholder may participate in the transaction on the same favourable terms.

Proportionality Principle and Vesting

Aligning financial benefits with actual commitment to the project.

Rather than granting 50% of the shares permanently from day one, the parties implement a vesting mechanism under which ownership rights accrue gradually over time. This prevents a situation where one shareholder ceases contributing to the business after only a few months while retaining half of the company’s equity.

Under such arrangements, shares become a genuine reward for long-term commitment. Shareholders clearly understand that their financial success is directly linked either to the passage of time (for example, monthly vesting over a three- or four-year period) or to the achievement of specific milestones (such as launching a market-ready product or acquiring the first 1,000 customers).

Separation of Ownership and Employment (Market-Based Compensation)

Separating the right to receive profits from share ownership (dividends) from remuneration for operational work.

The contribution of shareholders actively involved in the business should be valued at market rates and compensated independently. As a result, a shareholder who ceases working for the company loses their management remuneration, protecting the remaining team members from a sense of unfairness.

The absence of precise legal arrangements between shareholders may result in decision-making paralysis and ultimately lead to the collapse of even the most profitable business. A Shareholders’ Agreement is not a manifestation of mistrust but a fundamental risk management tool.

Exit procedures, valuation methodologies, and deadlock resolution mechanisms should be discussed when relations between business partners are at their strongest. Once a crisis arises and emotions, conflicting interests, and divergent financial expectations take over, the absence of clear, pre-negotiated rules of engagement usually marks the end of the business relationship.

What is your view? Do you believe that Polish entrepreneurs are sufficiently aware of the risks associated with a 50/50 ownership structure? Should a Shareholders’ Agreement become a standard requirement whenever a limited liability company is incorporated?