A members’ agreement regulates the rights and obligations among members. In this article, you will learn when it is useful and what it should include.

A members’ agreement complements the articles of association of an LLC (Limited Liability Company). It establishes clear rules between members and protects against conflicts or unexpected changes. In an LLC, multiple owners with different interests often come together. While the articles of association are public and legally binding, a members’ agreement governs the private-law relationships between members – confidentially and individually.

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Why Is a Members’ Agreement Important?

It prevents disputes, provides planning security, and establishes binding rules for decision-making processes. It is particularly essential in SMEs, start-ups, or family businesses to clarify arrangements for succession, sale, or the exercise of voting rights.

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Typical Contents of a Members’ Agreement

• Voting agreements: How do members vote on important resolutions?
• Transfer of membership interests: What conditions apply when selling or inheriting membership interests?
• Pre-emptive and co-sale rights (Tag-Along/Drag-Along): Protecting members or requiring co-sale.
• Dividend policy: Rules on profit distribution or reinvestment.
• Non-compete & confidentiality: Protection of company interests.
• Sanctions for breach: Penalties or purchase rights.

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Form and Validity

A members’ agreement is not a public document and is not entered in the commercial register. However, it is legally binding under civil law and should be in writing and signed by all parties. Because such agreements are often complex, Startups.ch provides support in drafting members’ agreements and is available to answer any questions.

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Conclusion

A well-drafted agreement can prevent future conflicts and stabilize cooperation in the long term. A members’ agreement creates trust, clear structures, and security – especially with multiple owners – and is an indispensable tool for good corporate governance.

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