A shareholders' agreement is essential for several reasons:
1. Protecting Interests: It ensures that the interests of all shareholders are protected. This is particularly important in a startup where the founders may have different levels of investment and commitment. 2. Clarifying Roles: It provides clarity on the roles and responsibilities of each shareholder. This helps in avoiding misunderstandings and ensuring that everyone knows what is expected of them. 3. Conflict Resolution: It offers mechanisms for resolving disputes among shareholders, thus preventing potential deadlocks that could harm the business. 4. Exit Strategies: It outlines exit strategies for shareholders who wish to sell their shares, ensuring a smooth transition and maintaining the stability of the company.