Shareholders Agreement

This template is a basic Shareholders Agreement.

It is designed for companies that have only two Shareholders who are both individuals and who each hold an equal number of shares.

It sets out the obligations of the Shareholders and the Company.

It requires the Shareholders to exercise their powers as shareholders by mutual agreement.
A Shareholder cannot sell their shares without the other Shareholder’s consent.

The template contains compulsory buy and sell provisions. You should read these provisions carefully. Basically, where one Shareholder (called X):

  • dies
  • becomes seriously disabled or mentally incompetent
  • is an officer or employee of the Company, and the Shareholder resigns or fails to fulfil their duties as an officer or employee of the Company
  • becomes bankrupt
  • commits a criminal offence, or
  • fails to remedy a breach of the Agreement,

then the other Shareholder (called Y) can make an offer to either buy X’s shares or sell their own shares to X. If the offer is not accepted, then X is compelled either to buy Y’s shares or to sell their own shares to Y, on the same terms as the initial offer made by Y.

The same applies where a Shareholder believes there are irreconcilable differences between the Shareholders.

This template does not provide for the Shareholders to take out death and permanent disability insurance.

This template is not suited to situations where there are more than two Shareholders or where the Shareholders are companies.

This template is provided by LegalRocket for the benefit of both Shareholders. It is provided free of charge and on the terms and conditions set out on the LegalRocket website.

It has been drafted by an incorporated legal practice registered under the Legal Profession Uniform Law in Australia.

It is recommended that the Shareholders obtain independent legal and financial advice prior to entering into this Agreement.

If you have any queries or concerns when completing this template, please phone a LegalRocket Lawyer on 1300 615 705 or chat with us for immediate and free help.

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