Constitution, replaceable rules and the agreement
- A company is governed by its constitution, the replaceable rules in the Corporations Act 2001 (Cth), or a mix of both.
- A shareholder agreement is a private contract between the shareholders (and often the company) that adds detail these documents do not cover. The documents should be consistent with each other.
Decision making
- Which decisions need unanimous or special approval — for example issuing new shares, borrowing above a limit, selling the business or changing its direction.
- Board composition: who can appoint directors and how deadlocks at board level are broken.
Contributions and roles
- What each owner contributes: capital, loans, time, intellectual property or expertise.
- What happens if someone stops contributing as agreed.
Exits and share transfers
- Pre-emptive rights so existing owners can buy before shares go to outsiders.
- Drag-along and tag-along rights for a sale of the whole company.
- What happens on death, incapacity, bankruptcy or a "bad leaver" event, and how shares are valued in each case.
Protecting the business
- Confidentiality and restraints on competing or poaching staff and clients. Restraints must be reasonable to be enforceable.
- Dividend policy and how profits are reinvested or distributed.
Resolving disputes
- A staged process — negotiation, then mediation, then other steps — can keep the business running while owners disagree.
- Buy-sell mechanisms can provide a way out of a deadlock.
Need help with this?
Tell us how many owners there are, the ownership split and the company’s constitution, if any. We’ll discuss the scope and engagement terms before drafting.
General information only, not legal advice. Laws differ between states and territories and depend on your circumstances.