Posted by: Glenn Ferguson | Date: 7 June 2019
One of the most important documents that a company should have is a shareholders agreement. It will outline in detail how the company should be operated and outlines all shareholders’ rights and obligations.
Whilst the Corporations Act 2001 and a company constitution provide a range of safeguards, obligations and procedural matters relating to how shareholders must act and must be treated, having a shareholder’s agreement in place will clearly define those matters. It ensures that all shareholders are treated equally and equitably.
A shareholders agreement supplements a company’s constitution by providing greater detail regarding the company’s activities and decision making. Typically, a shareholders agreement will contain a clause providing that, to the extent of any inconsistency with the company’s constitution, the shareholders agreement prevails.
Some of the most important matters that shareholders agreements address are such things as the raising of funds, who can be invited to become a shareholder and what happens in the event a shareholder wants to sell or becomes incapacitated or passes away.
It also allows shareholders to make decisions about what outside parties may become future shareholders.
Many start-up companies do not consider putting in place a shareholders agreement and this can be detrimental in the future, particularly where a company has significant growth.
In our opinion, a shareholders agreement should fit each companies individual and unique requirements. Whilst at a minimum a shareholders agreement will have clauses addressing the following matters:
This list is just an indication of what needs to be considered and not exhaustive.
At FC Lawyers we have an expert team who have assisted in the drafting of shareholder agreements for companies and businesses both large and small across an in the profit and non for profit sector including agriculture, construction, education, entertainment, finance, healthcare, insurance, hospitality, manufacturing, media, real estate, service related, start-ups, technology, trade, transport and tourism.
Contact our team today to discuss your shareholders agreements needs, or if you have any other legal issues.