What are shareholder agreements and do I need one?

A shareholders' agreement is an agreement between shareholders in a company where they agree how the business of the company will be conducted and how the company will be managed. A shareholders’ agreement expands on the company’s constitution or the replaceable rules (whichever is applicable to the company).

You should consider whether your industry or particular business has its own peculiarities that need to be documented.

Some matters that you may want to consider when entering into a business with someone else are:

• What are you going to do if the business needs more money?
• What happens if one of the shareholders dies unexpectedly?
• What happens if the shareholders have a falling out or if one leaves and sets up in competition to the company?
• What happens if you see an opportunity to expand the business but the other shareholders don't want to or can't afford to?

What is a buy sell agreement?

It is an enforceable contract between owners of a business or jointly held asset dealing with the transfer of ownership in and control of that business or jointly held asset.

Do I need a buy sell agreement?

If in your own name, or that of a Company or Trust, you hold with other parties an interest in a business or jointly held asset and on the death, trauma to or disability of one of the people with whom you are in business or hold the asset you need to provide:

• A structured timetable for;
• A ready and adequate source of funds to permit both;
• The purchase by you at an agreed value of the deceased, traumatised or disabled's interest in the business or jointly held asset; and
• Transfer of control in that business or asset.