Shareholder Agreements for Pennsylvania Businesses

A shareholder agreement is a contract among the owners of a corporation that sets out how the business is run, how shares can be sold, and what happens when an owner leaves, dies or disagrees with the others. The Law Offices of Michael Kuldiner, P.C. drafts and reviews shareholder and LLC operating agreements for closely held businesses in Bucks County, Montgomery County and Philadelphia. Call (215) 942-2100.

Reviewed by Michael Kuldiner, Esq. Last updated October 2026.

What does a shareholder agreement cover?

• Who manages the company and how major decisions are approved
• Limits on selling or transferring shares, including rights of first refusal
• Buy-sell terms when an owner dies, becomes disabled, retires or is removed, including how the shares are valued and paid for
• What happens in a deadlock between equal owners
• Confidentiality and non-competition obligations of owners
• How disputes are resolved, such as mediation or arbitration before a lawsuit

Is it the same as bylaws or an operating agreement?

No. Bylaws are the corporation’s internal rules. A shareholder agreement is a separate contract among the owners. LLCs use an operating agreement, which usually covers the same ground.

When should we sign one?

When the business is formed or when a new owner comes in, before any disagreement. Agreements are much harder to negotiate once owners are in conflict.

What if we never signed one and now disagree?

The company’s bylaws or operating agreement and Pennsylvania business law will govern, which may not reflect what the owners intended. See partnership disputes and buy-sell agreements.

Talk to a business lawyer

Call (215) 942-2100 or contact us online to arrange a consultation.

Attorney advertising. This page provides general information about Pennsylvania law and is not legal advice. Every situation is different. Consult a licensed Pennsylvania attorney about your specific circumstances.