Shareholder Accession Deed

A Shareholder Accession Deed is a written agreement which new shareholders usually sign before formally becoming a shareholder. This Deed confirms that the new shareholder consents and agrees to be bound by the terms of the existing shareholders agreement. In contrast with Company Constitutions, Shareholders Agreements are actually only enforceable upon those who originally sign it. This will save the original shareholders from having to issue new Shareholders Agreements each time new shareholders come on board. 

Benefits of Deeds of Accession

A key advantage of a deed of accession is that it is a simple way of ensuring the original shareholders agreement is binding on all shareholders, old and new. This is important as shareholders agreements are only enforceable against those who signed it originally or who agree to be bound by it at a later time. This is in contrast to a company’s constitution, which is automatically binding on all shareholders as per the Corporations Act. By using deeds of accession, the rights and responsibilities under the original shareholders agreement become the same for everyone. This is quite significant, as the shareholders agreement typically covers important rights such as voting rights. It may also cover issues such as who will need to buy the shares of a shareholder leaving the company.

Another advantage of deeds of accession is that courts can enforce them without the need for consideration. That is, no payment is necessary between the parties to find the agreement to be legally binding on them. This is because of the formal nature of the document, which must satisfy certain requirements in terms of how it is written and how the relevant parties sign it.

Deeds of accession are also beneficial in saving everyone both time and money. Indeed, it removes the need to spend money on creating lengthy shareholders agreements each time new shareholders want to invest. Instead, you can simply use the same form of deed for each new shareholder.