A Shareholders Agreement is a contractual document that sets out the rights and obligations of shareholders in the context of their ownership of a company. In drafting shareholder agreement it is important that the interest of the company as well as the shareholders are covered appropriately. A well drafted shareholder agreement would stipulate what would happen to a company if the structure of the company changes over time or if something unexpected happens to a Director.
It is not uncommon that in course of running a business, disputes between shareholders may arise which could potentially hamper the growth of the company. The goal of the Shareholder Agreement is to identify the potential sources of the dispute in advance by taking into account of the future plan of the directors and include appropriate clause in the agreement regulating the conduct of all parties and ensuring efficient operation of the business.
Generally, Shareholder Agreement contains following clauses:
- Operation and management of the company in different situations
- Details of arrangement between shareholders
- Dividend distribution policy
- Dispute resolution process
- Share management and transfer
- Event of death
- Company objectives
- Restraint of trade
- Drag along rights
- Tag along rights
- Weight of votes
As the context of every business structure is distinct, a well drafted shareholder agreement needs to be tailored to your company needs and future plan.
If you need professional assistance with drafting your Shareholder Agreement, or want someone to review your existing Shareholder Agreement, you could contact us on (02) 8379 1811 or email@example.com.