Shareholders Agreements govern the relationship between Shareholders and Directors of a company. These agreements can assist in outlining the Director and Shareholders responsibilities, rights, liabilities and obligations to protect their respective interests in the company.
Shareholder Agreements also identify the procedures for resolving disputes if any should occur. This enables the company to manage disputes promptly and effectively with transparency, causing minimal disruption to the business.
Each Shareholder Agreement must be uniquely customised to suit the requirements of the company. A Shareholder Agreement is designed to meet the gaps left by the basic Shareholder safeguards provided under the Corporations Act 2001 and the Company’s Constitution.
Agreements can typically include provision for the following:
- Terms of agreement
- Shareholder rights, including voting powers, issuing and transferring shares and valuation method
- Director appointment, rights and obligations
- Veto powers for shareholders
- Funding arrangements
- Dispute resolution
- Management and operation for the company or business
- Shareholder rights, including voting powers and issuing shares
- What to do when shareholders enter or leave the company or business
- Competition restrictions
Some important provisions often forgotten in a Shareholder Agreement include:
- Sale price determination method
- Protections for minority Shareholders
- Specifying when majority or unanimous votes will be required
- Termination clause
- Selling or transfer options for Shareholders
- What to do in the event of a Shareholder’s death, bankruptcy or they can no longer continue their vote
- Deadlock or dispute provisions
BDN can assist with drafting a uniquely customised Shareholder Agreement for your Company to cover any potential issue your Company my encounter.
We are also able to review and amend Shareholder Agreements for you. As well as, advise on any issues concerning Shareholders or Directors.
Please call our office if you would like advice about a Shareholder Agreement.