Protect shareholder rights with clear governance, share transfer rules, and exit mechanisms. AI customises every clause with your company details.
Names, shareholdings, share classes, and initial capital contributions for each shareholder.
Director appointment rights, board composition, voting thresholds, and reserved matters requiring unanimity.
Right of first refusal, transfer restrictions, valuation methods, and approved transfer processes.
Dividend policy, distribution timing, and different rights for different share classes.
Majority sale rights (drag-along) and minority protection rights (tag-along) on standard terms.
Deadlock resolution mechanisms, dispute procedures, and shotgun/buy-sell clauses.
Set clear rules for governance, equity, and exits before you start building.
Define investor rights, board seats, and anti-dilution protections.
Manage succession, share transfers within the family, and prevent outside sales.
Structure a corporate JV with clear governance and exit provisions.
Select the shareholders agreement from our library.
Gemini AI fills in company details, shareholder names, shareholdings, and governance terms. All placeholders removed.
Review and send to all shareholders. Everyone signs electronically from any device.
A shareholders agreement is a private contract between the owners of a company that governs how the company is run, how shares can change hands, and what happens when shareholders fall out or want to leave. In Australia, a company is governed by the Corporations Act 2001 (Cth) and its constitution, but those documents rarely deal with the commercial realities between owners. The shareholders agreement fills that space, setting the rules that the constitution and the default statutory provisions leave out.
Any company with more than one shareholder benefits from a shareholders agreement, and it is best put in place early. Co-founders use it to agree governance, equity, and exits before the business gains value, companies taking on investors use it to define investor rights and board seats, family companies use it to manage succession and keep shares within the family, and joint venture companies use it to structure a corporate partnership. The cost of having one is trivial compared with the cost of a shareholder dispute without one.
A complete shareholders agreement records each shareholder's shareholding and share class, sets out board composition and the decisions requiring special or unanimous approval (reserved matters), and defines the dividend policy. It should include share transfer rules with pre-emptive rights, drag-along and tag-along provisions, a share valuation method, and deadlock and dispute resolution mechanisms. Exit provisions covering retirement, death, and what happens to a leaver's shares are essential, as are confidentiality and any restraints on competing.
The company constitution is the public governing document binding the company and members under the Corporations Act, while the shareholders agreement is a private contract that can hold commercially sensitive terms. The two need to work together. Because they can overlap on matters like share transfers and decision-making, the agreement usually states that, as between the shareholders, the agreement prevails if there is a conflict. Reviewing both documents together when drafting avoids inconsistencies that create uncertainty later.
A shareholders agreement is an ordinary contract, needs no witness, and can be signed electronically under the Electronic Transactions Act 1999 (Cth), with all shareholders (and often the company) signing. Common mistakes are not having one until a dispute erupts, omitting deadlock provisions in an evenly owned company, leaving share valuation undefined, forgetting drag-along and tag-along rights when investors come in, and allowing the agreement and the constitution to drift out of alignment. Addressing transfers, exits, and deadlock upfront is what protects the company when relationships change.
This page is general information about shareholders agreements in Australia and is not legal advice. Corporate arrangements can be complex and interact with the company constitution and the Corporations Act. For company formation or investment, seek advice from a qualified Australian lawyer.
It is not legally required, but it is strongly recommended for any company with more than one shareholder. Without one, you rely on the Corporations Act 2001 (Cth) default rules and the company constitution, which often do not address practical realities like share transfers, dividend policy, dispute resolution, or what happens when a founder wants to exit. A shareholders agreement fills those gaps with terms tailored to your company.
The constitution is the company's public governing document, lodged with ASIC and binding on the company and its members under the Corporations Act. A shareholders agreement is a private contract between the shareholders that can include commercially sensitive terms (such as exit rights and dividend policy) you would not want public. The two should work together, and where they could conflict, the agreement usually states which prevails between the shareholders.
Drag-along rights let majority shareholders require minority shareholders to join a sale of the company, so a buyer can acquire 100 percent. Tag-along rights protect minority shareholders by giving them the right to join a sale on the same terms as the majority. Together they balance the interests of large and small shareholders, and both are standard in a well-drafted agreement.
Pre-emptive rights (a right of first refusal) require a shareholder who wants to sell to first offer their shares to the existing shareholders before selling to an outsider. This keeps ownership within the original group and prevents unwanted third parties becoming shareholders. The agreement should set out the offer process and how the shares are valued.
For companies with two equal shareholders or evenly split blocs, deadlock can paralyse decisions. The agreement should include a deadlock mechanism, such as escalation to mediation, a casting vote, or a buy-sell (shotgun) clause where one side offers to buy the other out at a set price and the other must either accept or buy on the same terms. Planning for deadlock upfront is far cheaper than litigating it later.
A shareholders agreement is generally an ordinary contract, so no witness is required and electronic signatures are valid under the Electronic Transactions Act 1999 (Cth). All shareholders sign, and the company is often a party too. If any element is executed as a deed, deed formalities would apply to that element.