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Jaspreet Potter, a solicitor at IBB solicitors, explains that a shareholders agreement is a contract between a company and its shareholders to govern their relationship. This agreement, along with the company's articles of association, sets internal rules for the company. The purpose is to prevent disputes and provide a resolution process if disputes occur. It is recommended to establish a shareholders agreement early on to address matters before the business is operating, making it easier for parties to agree on important issues.