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calendar    Mar 20, 2016

Why the need for a Shareholders Agreement?

The expression Shareholders Agreement is usually referring to written agreement between shareholders of a company or the partners of a business. The agreement usually covers the structure, funding arrangements, management arrangements, key policy issues and often incorporates many other important clauses.

The expression “Shareholders’ Agreement” is usually referring to written agreement between shareholders of a company or the partners of a business.  The agreement usually covers the structure, funding arrangements, management arrangements, key policy issues and often incorporates many other important clauses, including clauses defining:

  • The process to be followed to resolve disputes between shareholders/partners;
  • The process to be followed upon the death or total disablement of a shareholder/partner (often referred to as Buy/Sell arrangements) ;

The terms are intended to outline the responsibilities and obligations of the business owners. By determining in advance how the issues that may arise during the life of a business are to be dealt with usually save considerable expense and reduces the anxiety when foreseen circumstances arise.

Next month we will provide a checklist identifying the important issues to be included in shareholders agreements.

If there is a dispute between shareholders of a company the outcome can be very uncertain in the absence of a predetermined process.  The options available for shareholders when a dispute arises are summarised in the article below.

Next month we will summarise the options available for partners when a dispute arises in a partnership.

Contact our Business Advisory Lawyers for further information. 

James Frank - jfrank@franklegal.com.au 

Andrew Graham - agraham@franklegal.com.au 

 

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