Shareholders Agreement NSW Lawyers

There can be no doubt that if you are a shareholder and a party to a shareholders agreement, written or verbal, that one day you will exit the shareholders agreement if you don’t voluntarily retire as a shareholder, then death can be avoided for only so long.

However, retirement and death are mostly not the cause of dispute amongst shareholders. My experience tells me that differing views as to the Company’s direction and expectations around return on investment are the source of most disputes amongst shareholders and when the parties are reaching for a copy of the shareholders agreement to check what their rights and obligations are.

If you become a party to a shareholders agreement, and the relationship is not working for you, then it’s too late to be constructing and agreeing to an effective and fair exit provision.

Before acquiring your shares you should insist upon the shareholders executing a shareholders agreement which contains an exit provision entitling you to exit the Company and to receive a reasonable price for your shares.

Most effective and fair agreements provide a mechanism for selling your shares and for determining the sale price for example, sometimes the shareholders on 1 July each year agree what the share price will be for that year.

See Also: What types of deadlock clauses are used in Shareholder Agreements?


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