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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, aimed at governing their relationship and outlining their rights and obligations. Together with the company's articles of association, the agreement establishes internal rules that shareholders must follow. The primary purpose is to prevent future disputes and provide a resolution framework if disagreements arise. It is advisable to create a shareholders agreement as soon as a company is incorporated or begins trading, as it is easier to reach consensus at this early stage than when the business is operational.