Partners’ agreement: Top 5 essential clauses to protect your business

Did you know that 30% of the shares are enough to trigger legal exclusion proceedings against a partner in Belgium? This worrying legal reality illustrates the vulnerability of entrepreneurs who neglect the drafting of a solid partners’ agreement. Faced with decision-making blockages, uncontrolled transfers and destructive conflicts, this confidential document becomes your best protection. With his experience since 2005, Maître Innocent TWAGIRAMUNGU supports Brussels entrepreneurs in securing their business relationships. Discover the five essential clauses to transform your partners’ agreement into a real legal shield.

What to remember:

• Inalienability clauses can now be of indefinite duration according to the CSA, but remain denounceable upon reasonable notice (unlike the old regime limiting their duration)
• The “Good Leaver/Bad Leaver” distinction allows a discount of 30 to 50% to be applied to the value of the shares in the event of wrongful departure (unjustified resignation, serious misconduct, violation of the pact)
• A right of veto can be granted to minority shareholders on strategic decisions (management recruitment, merger, sale of assets), protecting their interests in structures with unbalanced capital
• More than 60% of conflicts between partners are resolved by mediation when a mandatory amicable resolution clause is provided for in the pact.

The insufficiency of statutes in the face of the challenges of modern governance

Company statutes, although obligatory, are no longer sufficient to organize the complex relationships between partners. Unlike the statutes filed with the commercial court registry and accessible to the public,the partners’ agreement remains confidential. This discretion makes it possible to address sensitive subjects such as remuneration, development strategies or exit conditions.

The principle of relativity of contracts, enshrined in article 1165 of the Belgian civil code, gives the pact particular strength. It creates rights and obligationsonly between the signatories, without committing the company itself. This legal subtlety offers valuable flexibility to adapt the rules to the specific needs of each shareholder configuration.

The statistics speak for themselves: more than 60% of conflicts between partners are resolved amicably through mediation. A well-drafted pact facilitates these negotiated solutions by providing crisis exit mechanisms. Without this protection, you expose yourself to costly and value-destroying legal proceedings.

Please note:Beyond governance mechanisms, confidentiality clauses constitute a fundamental element of the associates’ agreement. They formally commit the signatories to maintaining the confidentiality of strategic information relating to the company: business secrets, development projects, sensitive financial data. In a competitive environment where information is worth gold, this legal protection becomes crucial to preserve your competitive advantages and avoid damaging leaks.

Top 5 essential clauses in your partners’ agreement

Clause n°1: The clear organization of governance and decision-making

In companies without an absolute majority, notably 50/50 joint ventures or structures with diffuse shareholding,the appointment of the managerbecomes crucial. Imagine two equal partners incapable of deciding on the choice of general manager. The blockage paralyzes the company. The pact can establish precise selection criteria: requiring that the manager be a partner or employee for at least 3 years, possess specific technical skills (engineering diploma for an industrial company), respect a minimum age of 30 years, or limit the number of mandates held in other entities to two.

The associates’ agreement makes it possible to anticipate these situations by precisely defining roles. You can provide for alternate management, co-management or the intervention of a third party manager. Prior approval clauses protect minorities by subjecting certain strategic decisions to their agreement: recruitment of a senior executive, launch of a new product, conclusion of a major partnership. In structures with unbalanced capital, a right of veto may even be granted to a minority shareholder on certain key decisions, thus guaranteeing the protection of its specific interests despite its unfavorable capital position.

The establishment of a strategic committee strengthens control while preserving operational efficiency. This “board” examines important directions without hindering daily management. The reporting obligation, whether monthly, quarterly or annual,maintains transparencybetween partners. This obligation must nevertheless remain balanced to avoid unnecessarily burdening the manager with excessive administrative constraints which would harm the operational efficiency of the company.

Clause n°2: Control of transfers with approval and pre-emption

Belgian legislation already imposes safeguards: to transfer shares in an SRL, you must obtain the agreement of at leasthalf of the partners owning three quarters of the capital. But these legal rules are not always enough to protect the desired shareholder balance.

The approval clause reinforces this control by subjecting any transfer to the approval of the co-partners. Concretely, if a partner wishes to sell his shares to his brother-in-law, the others can oppose it if they consider this entry prejudicial. The pre-emption clause goes further: it requires the shares to be offered as a priority to existing partners before any third party.

To further stabilize the shareholding, the inalienability clause temporarily prohibits any transfer. Article 7:78 of the Companies and Associations Code now requires that this restriction be justified by a “legitimate interest”. A duration of 2 to 3 years generally allows the joint project to be consolidated. Important legislative development: these clauses can now be concluded for an indefinite period according to the CSA (unlike the previous regime which required a limited duration), but they remain denounceable at any time with reasonable notice. The joint exit clause (tag along) completes the system byprotecting minorities: if a majority sells, they can demand to transfer their shares under the same conditions.

Practical example:A Brussels technology startup brings together three founders with respective shares of 40%, 35% and 25%. To avoid the entry of non-strategic investors during the product development phase, they introduce a 24-month inalienability clause. This period allows them to finalize their prototype and file two European patents. When an investment fund approaches the minority partner with an attractive offer after 18 months, the clause blocks the transaction. The founders then negotiate together a structured fundraising which values ​​the company at 3.5 million euros, or 40% more than the initial unsolicited offer.

Clause no. 3: Exclusion and exit arrangements adapted to the Belgian context

The new Code of Companies and Associations revolutionizes the possibilities of exclusion. Exclusion « as of right » now makes it possible to automatically exclude a partner in certain situations: death, bankruptcy, termination of collaboration, violation of contractual obligations. Situations of exclusion may specifically include bankruptcy, judicial liquidation, professional ban on the shareholder (disbarment from the bar for an associated lawyer, withdrawal of approval for a chartered accountant), or the violation of specific contractual obligations defined in the statutes (non-compliance with the non-competition clause, disclosure of confidential information). This procedure avoids lengthy legal battles that can destroy the value of the company.

The “Russian roulette” clause breaks deadlocks between partners. Its principle? One partner offers to buy the other’s shares at a price he sets. The other must then choose: sell at this price or buy back the shares from the offeror at the same price. This mechanism encourages offering a fair price sincethe applicant risks having to sellif he undervalues ​​the shares. It is important to note that only effective voting rights are taken into consideration for the exclusion action, thus excluding holders of options, convertible bonds or warrants from this procedural possibility.

The situations triggering exclusion must be precisely defined: non-compliance with obligations, recurring disputes, behavior harmful to the company. The majority vote at a general meeting may be sufficient if the statutes provide for it, thus avoiding systematic recourse to the Company Court. In the event of the death of a partner, the pact must provide whether the company continues with the heirs or whether the remaining partners repurchase the shares at their value on the day of death, these provisions fairly protecting the family of the deceased as well as the surviving partners.

Clause n°4: Fair valuation with “Good Leaver/Bad Leaver” distinction

Determining the share redemption price often crystallizes tensions. Articles 2.66 and 2.67 of the CSA provide new security:the judge is now bound by the contractual provisionsvaluation, except at a clearly unreasonable price. The assessment must imperatively be carried out from a business continuity perspective and, crucially, without taking into account the impact of the conflicting behavior of the parties on the situation which led to the exclusion request. This objective approach ensures that interpersonal tensions do not artificially influence financial valuation.

The distinction between “Good Leavers” and “Bad Leavers” makes it possible to adapt the financial conditions to the context of departure:

• “Good Leavers” (departure by mutual agreement, death, serious illness, retirement) benefit from buyback at fair market value
• “Bad Leavers” (resignation without valid reason, dismissal for serious misconduct, violation of the pact) suffer unfavorable conditions, with a discount of up to 30 to 50%

The assessment is made on the date of transfer, from a going concern perspective. This objective approach preventsthe conflicting behavior of the partiesdoes not artificially influence the valuation. An independent expert may be appointed to guarantee the impartiality of the process.

Practical advice:The dividend distribution policy constitutes an often neglected but essential element of the shareholders’ agreement. A profit distribution clause can stipulate a specific policy: automatic reinvestment of profits during the first three years, minimum distribution of 30% of distributable profits thereafter, or priority payment to investors until their initial investment is recovered. This anticipation avoids recurring conflicts over the allocation of results between partners with different investment horizons.

Clause n°5: Mandatory amicable resolution before any legal action

Mediation is emerging as the preferred way to resolve conflicts between partners. More than 60% of disputes thus find a favorable outcome without court intervention. The partners’ agreement may make this step obligatory before any legal referral.

The practical arrangements must be defined: appointment of an approved mediator, recourse to the Belgian Arbitration Chamber, implementation deadlines. The procedures are organized in progressive escalation: direct negotiation, mediation, arbitration, then only as a last resort the Company Court.

The unanimous agreement clause for crucial decisions completes this preventive system. It imposes consensus on major subjects: modification of capital, merger, transfer of strategic assets. This requirement forces dialogue andprevents forceful passagesdestructive to group harmony.

The continued adaptation of the pact to legislative and entrepreneurial developments

The partners’ agreement is not a fixed document. Case law is constantly evolving, as illustrated by the judgment of the Court of Cassation of March 30, 2022 on non-competition clauses. These must now beproportionate and limitedin time and space to remain valid.

The periodic review of the pact, ideally every 2 to 3 years, allows you to integrate legislative changes and the evolution of your company. The entry of new partners, international development or the preparation of fundraising require specific adjustments.

Drafting an effective shareholders’ agreement requires in-depth legal expertise and an in-depth understanding of entrepreneurial dynamics. Master Innocent TWAGIRAMUNGU, with nearly 20 years of experience incorporate law in Brussels, supports Brussels entrepreneurs in securing their business relationships. Its transversal approach, combining legal rigor and human dimension, guarantees tailor-made solutions adapted to each business configuration. To protect your entrepreneurial project and anticipate potential crises, seek the expertise of a recognized professional in Brussels.