What Is A Shareholder Agreement?


A Shareholder Agreement is a legal contract between two or more shareholders or business owners that sets out the rights, obligations, and duties of each partner. In the corporate world, it is natural to have miscommunication over the contract terms among the Partners or shareholders that can lead into disputes if remain unresolved. Disputes can also occur over how to run the business, share sale agreements or over monetary returns and capital distribution. If a business has multiple shareholders, a Shareholder Agreement is helpful in clarifying how the decisions process will function to smoothen the business process. It also mitigates future confusion and conflicts regarding shareholders who are not mentioned in the constitution. We understand that comprehending the complications of legal obligations is far from easy. At Perth Commercial Lawyers, we are committed to providing thorough assistance to ensure fair practise in conducting legal operations. We can help in clarifying complex legal terms to give straightforward guidance to help you pursue your business goals.

What Is Included In A Shareholder Agreement?

The Shareholder Agreement is different for every company as they have different sets of revenue and practices. Some provisions in Shareholder Agreement includes the quantity of shareholders, their objectives, funding arrangements, business nature, and industry practices. However, some general clauses are included in every Shareholder Agreement, as shown below:-

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  • If there is any inconsistency between the Shareholder Agreement and the constitution, the Shareholder Agreement will be given priority over the constitution.
  • For resolving issues and disputes among the shareholders, Shareholder Agreements must have an alternative dispute resolution process (ADR) to follow, such as negotiations, before engaging any legal action.
  • Deadlock Breaker – Provisions associated with circumstances where shareholders do not agree with company management.
  • Shotgun clause – It allows the shareholder to purchase the shares of another shareholder.
  • Chairman Clause – It permits one shareholder to be the chairman/chairwoman and have the tiebreaking vote.
  • Liquidation Clause – It sets out the process for the company being intentionally wound up if the deadlock remains for a set duration of time.
  • Provisions outlining how leaving shareholders need to offer their shares to remaining shareholders before offering them to the external parties.
  • Provisions balancing rights among the big and small shareholders. The majority of shareholders may need minority shareholders to assist in the sale of shares in the organization. The minority shareholder has the right to fairly selling their minority stake.
  • Provisions governing compulsorily selling shares in particular situations, such as the owner passing away, resigning, or filing for bankruptcy.
  • Provisions setting out the method to evaluate the true value of a share.
Get Legal Help From Commercial Lawyers In Perth For Help Regarding Shareholder Agreements

Get Legal Help From Commercial Lawyers In Perth For Help Regarding Shareholder Agreements


Commercial Lawyers Perth are solely focused on providing quality legal advice to get the best possible results for our clients. Over the years, our legal team has worked with a diverse range of clients spanning individuals, small and mid-size companies, and large companies. We comprehensively prepare Shareholder Agreements to include the best terms and conditions that suit our client individuals and businesses. If you require legitimate counsel regarding Shareholders Agreements, please reach out to us for any support you need. Our team at Commercial Lawyers Perth have extensive experience in guiding clients regarding Shareholders’ Agreements and the associated legal issues. We are committed to drafting Shareholder Agreements in our clients’ best interest, while complying with the clauses of the company’s Constitution. We aim to give our clients valuable legal aid to ensure that their interests are legally protected by the Shareholder Agreement.

Get Legal Help From Commercial Lawyers In Perth For Help Regarding Shareholder Agreements
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