A standard company constitution will not always protect
shareholders in the event of a dispute between members. This is
where a shareholders' agreement, regulating the rights and
obligations of shareholders, can help avoid the uncertainty of
costly court litigation. While it is not compulsory under the
Corporations Act, a considered and properly formulated
shareholders' agreement is highly recommended for all
companies.
So, what should you include in a shareholders'
agreement?
Every shareholders' agreement should be individually
tailored because every company is different. The specific
provisions of each shareholder agreement should take into account
the number of shareholders, the objectives of the shareholders, the
funding arrangements, and the nature of the business or industry in
which the company operates. However, there are also some basic
clauses that every shareholder agreement should have.
