Shareholders’ Agreements and Disputes

We have recently seen a significant number of avoidable disputes between shareholders with common oversights leading to those disputes.

The first and most common problem is not having a shareholders’ agreement at all.

Shareholders should have shareholders’ agreements as:

  • A company constitution and the Corporations Act 2001 will not specifically address all issues between shareholders that may arise.
  • A well drafted shareholders’ agreement can eliminate many of the uncertainties which would otherwise exist.
  • Uncertainties and impasses which often exist due to the absence of a shareholders agreement can lead to disputes which both undermine the business and leave shareholders locked into a bad situation for months or even years.

Often we see not enough attention given to voting rights.  Shareholders should consider carefully what decisions require ordinary, special or unanimous resolutions, including what that will mean for them given the percentage of shares they, or groups of shareholders voting together, hold.

Should you require assistance with preparation of shareholders’ agreements or in resolving disputes between shareholders, please do not hesitate to contact Tom Read, Peter Bazzani or Elizabeth Priddle.