Shareholders Agreement Checklist

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Entering a Shareholders Agreement is like entering a corporate marriage and the Shareholders Agreement is the prenup that will help you understand your rights, obligations and options as a shareholder.

The balance of each and every term can be delicate, and getting it wrong can lead to serious financial consequences and misunderstandings. The Shareholders Agreement Checklist below is the best starting point for helping you think about the key issues that will need to be included in a Shareholders Agreement, and setting out your intentions in writing. Fill out the checklist below to get started with a Shareholders Agreement. Your answers will let us know what advice you may need, and help us in the process of drafting your Shareholders Agreement. If there are certain questions you can't answer at this stage, just put ‘I don’t know’ or get in touch!

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1. Company and Shareholders' Details

A. What is the name, ACN and address of the Company?
B. What are the names (and ABN's, if applicable) and addresses of all the Shareholders?
C. How many shares will each Shareholder own?

2. Business

A. What is the description of the business?
B. Who will be a signatory to bank accounts?
C. Will there be any restrictions relating to the running and/or nature of the business?
D. What agreements will each Shareholder need to enter with the Company (e.g. director/employment agreements)?

3. Board of Directors

A. What is each Director's full name?
B. Does each Shareholder have the right to appoint/be a director?
C. Who will be the company secretary?
D. Who will be the chair of the Board? Will the Chair have any extra rights (e.g. casting/deliberative vote)?
E. How many directors need to be present at board meetings (and/or who)?

4. Capital and Financing

A. What is the initial capital contribution required from each Shareholder (if any)?
B. When does the contribution need to be paid?
C. How will any further funds be raised?
D. Can new shares be issued (e.g. to new investors)?
E. How will decisions relating to new investors be made?
F. Will there be any loans (including loans from Shareholders) and if so what are the terms of the loans?

5. Assets

A. Will business assets be owned by the Company?
B. What are those assets (e.g. trade mark and copyright materials, equipment purchased in relation to the business)?
C. Will there need to be an assignment of any rights (e.g. trade mark or copyright) to the Company)?

6. Distributions of Income and Profits

A. How will net profit be apportioned and how/when will dividends be paid?
B. Any specific requirements as to order of distribution of profits and other payments (e.g. loans to shareholders repaid first)?

7. Books of Account

A. Any specific requirements for account keeping?
B. Who will be the accountant/auditor?

8.Budgets, Business Plans and Management Reports

A. Any requirements and time frames for budgets, business plans, marketing plans and management reports, etc?

9. Limitation on Ownership and Transfer of Shares

A. Any restrictions on the transfers of shares (e.g. must offer to other Shareholders first, may not sell to third parties unless approved by all Shareholders)?
B. Will Shareholders have tag along and/or drag along rights?
C. Can any Shareholder be forced to sell their shares? If so, list the circumstances and how the price will be determined (consider whether the Shareholder can be forced to sell their shares if they don't provide a certain level of services).

10.Decisions and Dispute Resolution

A. How will decisions be made (e.g. majority vote vs 75% vs unanimous)?
B. Who can make decisions?
C. How will disputes be resolved? Is there a preferred method of dispute resolution (e.g. mediation, conciliation, arbitration etc)?

11. Non-Competition

A. Will there be restrictions on all Shareholders' involvement with any similar business? If so, how long and in what territory will these restrictions last for?

Your Details

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Your Name
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