Shareholders Agreement
A Shareholders Agreement allows you to clarify the relationship between shareholders of your company.
Last updated October 23, 2025
Suitable for Australia
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Do I need a shareholders agreement, and when?
Do I need a shareholders agreement, and when?
Yes, if your company has two or more shareholders, and the earlier you put one in place, the better.
Most businesses only think about a shareholders agreement once a disagreement is already brewing, by which point negotiating terms is much harder. Sign one while everyone's still on good terms, ideally right after incorporation or before bringing in a new co-founder or investor.
What happens if there is no shareholders agreement?
What happens if there is no shareholders agreement?
Without one, you're relying only on the Corporations Act 2001's default replaceable rules and your constitution, neither of which covers common flashpoints like a shareholder wanting to exit, a deadlock, or someone dying.
Disputes that a clause would otherwise settle end up needing legal advice or, in serious cases, court action under the Act's oppression remedy, which costs far more than an agreement upfront.
Is a shareholders agreement legally binding?
Is a shareholders agreement legally binding?
Yes. A shareholders agreement is a binding contract between the shareholders who sign it, once everyone signs with a genuine intention to be bound.
It doesn't need to be witnessed to take effect, though having a witness helps if you ever need to prove who signed and when. It sits alongside your company's constitution and the Corporations Act 2001, rather than replacing either.
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Frequently asked questions
What are vesting, drag-along, tag-along and pre-emptive rights in a shareholders agreement?
keyboard_arrow_upWhat are reserved matters, and what happens if shareholders reach a deadlock over one?
keyboard_arrow_upWhat happens if a shareholder leaves or passes away?
keyboard_arrow_upHow does a shareholders agreement protect minority or founding shareholders?
keyboard_arrow_upWhat's the most common mistake businesses make with a shareholders agreement?
keyboard_arrow_upHow is a shareholders agreement different from a company constitution or a co-founder agreement?
keyboard_arrow_upWhich parts of the Corporations Act apply to a shareholders agreement?
keyboard_arrow_upCan a shareholders agreement template be customised?
keyboard_arrow_upCan new shareholders be added to the agreement later?
keyboard_arrow_upHow long does it take to create a shareholders agreement?
keyboard_arrow_upWhat does a shareholders agreement cost, template versus a lawyer?
keyboard_arrow_upView Sample Shareholders Agreement
The Legal Risk Score of a Shareholders Agreement Template is Medium
Our legal team have marked this document as medium risk considering:
- The document allows for significant control over company decisions by a limited number of shareholders, which might concentrate power and limit broader shareholder influence.
- There are provisions that allow for the sale or transfer of shares under specific conditions which could lead to potential changes in ownership that might not align with all shareholders' interests.
- The agreement binds parties to specific actions regarding the management and operational direction of the company, which could restrict flexibility in responding to future business challenges or opportunities.
Meet Our Users
Articles about Shareholders Agreement
Why your business needs a Shareholders Agreement
Learn about a shareholders agreement, what it includes and how it can be beneficial for your business.
When to Use a Shareholders' Agreement (2025 Update)
A Shareholders' Agreement protects both a company and its members by setting out the terms of ownership. Find out when to use one here.
Directors’ Roles in Shareholders Agreements
There's no one correct form of shareholders agreement. This raises the question, what should you include in your shareholders agreement? Find out here.
Quick Tips: Legal Documents For Business Founders
Learn about the legal documents, including Shareholder's Agreement and Vesting Agreement, that you may need when starting a business.
Company Constitution vs Shareholders Agreement
A company constitution and shareholders agreement are both crucial documents when starting your company. Find out how they're different in this article.
Checklist For New Shareholders
Just become a new shareholder in a business? Not sure exactly what shareholders rights and responsibilities are? Learn today about being a new shareholder!
Can Shareholders Liquidate a Company?
Shareholders have an inherent interest in the performance of their company. But if the company is struggling, can shareholders liquidate the company?
How to Exit Your Shareholders' Agreement
Are you looking to sell your shares in a company but don't know your exit route? Read on to learn how to exit your shareholders' agreement.
Explaining Good Leaver and Bad Leaver Provisions
Any strong Shareholders Agreement will include good and bad leaver provisions for departing shareholders. Find out more here.
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