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ARTICLE · 11 MAY 2026

Paper Tigers: When Startup Contracts Can’t Save You

Every term sheet that graduates to a signed Shareholders’ Agreement (SHA) arrives loaded with investor protections. They look formidable on paper. They are fought over by lawyers on both sides. And in India, a surprising number of them prove difficult to enforce in practice once a dispute with a founder escalates...

IndiaLitigation, Mediation & Arbitration
  1. The Armour You Think You Have

Every term sheet that graduates to a signed Shareholders’ Agreement (SHA) arrives loaded with investor protections. They look formidable on paper. They are fought over by lawyers on both sides. And in India, a surprising number of them prove difficult to enforce in practice once a dispute with a founder escalates.

Here is the standard toolkit and the practical limitations that have typically emerged.

Protective Clause Theoretical Function within the SHA Practical Limitations in the Indian Legal Context
Reverse / Founder Vesting Founders earn their shares over 3 – 4 years. Departure before vesting, or termination for ‘cause’ (including alleged misconduct or gross negligence), results in unvested shares returning at nominal value often INR 1 per share. In theory, a meaningful deterrent.

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