Shareholder agreements are typically entered into by shareholders of a private company. The document outlines the parties their contribution and rights and responsibilities. They can cover a myriad of issues and provide the framework for how issues are resolved.

This should be done after you have started a new company or other commercial arrangement such as a joint venture.

Depending on the relationship and the investment at stake it is important to ensure that the shareholders agreement covers you adequately. Mostly all commercial ventures start well, but if a problem arises (as they often do) having proper documentation will be your saviour.

Shareholder agreements are legally binding so it is important to get the right advice and drafting done by a professional. Whilst you can obtain a template, these will not cover all the legal issues specific to you and the other shareholders. A lawyer who is experienced in drafting shareholder agreements and has a deep understanding of the Corporations Act will be the most help in drafting and negotiating the right agreement.

A shareholder’s agreement defines the rights and obligations of the parties. Issues which might be addressed are the day to day running of the business, management, role of shareholders, how to handle disputes between shareholders and how profit is to be distributed, to name but a few.

Such items that may be covered in a shareholders agreement are:

• Number of Shares issued in the company
• The value of Shares
• Class of Shares
• Who can be a shareholder
• How a shareholder can sell their shares
• What happens if a shareholder dies, resigns or is declared bankrupt or insolvent
• Shareholders entitlements and responsibilities
• How dividends are paid and splitting of profits
• Shareholder meetings and voting rights

Starting with the end in mind.

Dealing with issues such as the exit and termination of the agreement at the outset is prudent practice. It is easier to negotiate these terms when the relationship is on a good footing rather than when the parties are in a dispute.

If you have been provided with a shareholders agreement from another party and require advice we can assist. You should fully understand all your rights and obligations and how your stake of the company will be secured. If required, we can propose amendments and negotiate further terms to protect your interests.

Shareholder Disputes

Many issues can arise between shareholders leading to a dispute. If you do find yourself in a shareholders dispute you will need the appropriate commercial advice to resolve the issue. Litigation lawyers can provide you with the right options and legal opinion to help resolve the dispute.

They will investigate the grounds of the dispute and using their experience give you both legal and practical options to achieve your desired outcome. In commercial disputes there can be any number of outcomes that can resolve any one dispute and our experienced lawyers work through all possibilities and avenues to achieve the best result for you.

How we can help?

Our law firm at PCL Lawyers has lawyers who understand the legal and commercial issues surrounding shareholder agreements. We regularly draft and advise on such documents and can also assist in a range of other associated legal needs when incorporating a company or starting a partnership.

We provide high quality legal advice and a professional service for all of our commercial clients. We have a focus on providing concise legal advice with commercial understanding.

Speak to one of our lawyers today regarding your shareholder agreement on 1300 907 335 or complete an online enquiry form.