Clear rules for ownership, control and the future of your company

A shareholders’ agreement sets out how a company will be owned, managed and controlled. It establishes the rights and responsibilities of shareholders and provides an agreed process for dealing with important decisions, changes in ownership and potential disputes.

Even where shareholders have a strong personal or professional relationship, disagreements can arise over business strategy, financial contributions, profit distribution, management responsibilities or the future direction of the company. A carefully drafted shareholders’ agreement can reduce uncertainty and help resolve these issues before they disrupt the business.

Why is a shareholders’ agreement important?

A company constitution provides a general framework for operating the company, but it may not address the particular commercial arrangements between its shareholders. A shareholders’ agreement can be tailored to the company’s ownership structure, business objectives and the expectations of its shareholders.

The agreement may cover:

◆ Shareholder and director roles

◆ Appointment and removal of directors

◆ Voting and reserved matters

◆ Shareholder funding and dividends

◆ Share issues and transfers

◆ New shareholders and investors

◆ Confidentiality, intellectual property and restraints

◆ Deadlock and dispute resolution

◆ Shareholder succession and exit arrangements

How we can help

Summit Lawyers can assist with:

◆ Drafting shareholders’ agreements

◆ Reviewing existing agreements

◆ Advising shareholders and investors

◆ Negotiating shareholder protections

◆ Aligning agreements and constitutions

◆ Preparing subscription and transfer documents

◆ Resolving shareholder disputes

When should you put an agreement in place?

A shareholders’ agreement should ideally be prepared when a company is established or before a new shareholder or investor joins the business. However, an agreement can also be introduced or updated when the company grows, its ownership changes, additional capital is required or the shareholders’ commercial expectations change.

Putting clear arrangements in writing while the relationship is cooperative is generally more effective than trying to determine the parties’ rights after a dispute has arisen.

Protect your business relationship

Every company and shareholder relationship is different. We can prepare an agreement that reflects your ownership structure, commercial priorities and plans for the future.