Legal documents, Newzealand legal agreement, legal forms for Newzealand

See complete example of Shareholders agreement (new or existing company).

About these documents:
These agreements are suitable for used for any type of trade, business or enterprise.

Such an agreement could be used by any shareholder or prospective shareholder as an idea for a draft agreement or a template for the enterprise. They are ready for use as they are, however, can be amended to suit unique and specific requirements.

Shareholders' agreements govern the relationship between shareholders. Simply, that means protecting the interests of one or more shareholders against the others. While the directors operate a company and make the decisions, they operate only in accordance with the instructions of the shareholders to whom they are accountable. Furthermore, to the extent that shareholders are also directors, they are bound to the terms of an agreement they have signed as a shareholder.

All but the short form agreement (NZ-CP106) include provision for valuation of the shares of a departing shareholder by reference to a valuation based on your instructions to an accountant. The valuation depends on the parameters used, so your instructions are critical. Net Lawman have provided an all-embracing version which you can amend according to the deal you wish to negotiate with a selling shareholder.

Additional warranties are set out should you require them. The warranties are similar to those you would find in a business sale agreement. The concept behind providing warranties is to make sure that a lender or new shareholder gets what he expects. Of course those selling the business know everything about it. Conversely, a buyer or lender knows nothing except what he is told. Warranties act to level the bargaining positions of the parties. The warranties as drawn are given by both the Company and the “other” shareholders. They therefore represent a very powerful weapon for the Lender. 

Important note: you will be aware of the alternative ways of providing the business structure for joint venture operations. Here are our suggestions:

• where two partners are involved in a major project, it may be more appropriate to form a new company and operate under a joint venture agreement.
• a limited liability partnership may be more suitable in certain circumstances.
• a limited partnership, rare though it is, is a simple structure which may reduce risk.

Who will use these documents:
NZ-CP101 is suitable for circumstances where two or more shareholders are forming a new company to work together in any business or industry. All are probably directors; however, the proportion of shareholdings may be different. One or more may work part time or not at all.

NZ-CP102 is suitable for circumstances where a new shareholder joins an existing company owned by one or more shareholders. The existing shareholders simply decide the time has come to set down their relationships for management and control.

NZ-CP103 is most suitable when two or more shareholders are forming a new company to work together in any business. All are probably, but not necessarily, directors. Shareholdings may be different. One or more may work part time or not at all. So, for example, my shares, probably a minority, are also to be owned by a major lender, who may be a bank or an individual. This person has no role in the day to day administration of the company but is concerned to make sure that the company is operated within a set of acceptable “regulations”. This will include the provision of timely reports and appropriate accounts. This document will be used most frequently for the occasion of a lender providing capital to the business and taking a shareholding as part of the whole package. This is likely to be the lender's document as it is he who will see himself as needing the protection from the pre-existing shareholders.

NZ-CP104 is most suitable when one or more shareholders own an existing company in any business. All are probably directors. Shareholdings may, or may not be different. One or more may work part time or not at all. They are joined by a new shareholder who is also a major lender. He may be a bank or an individual. This person has no role in the day to day administration of the company but is concerned to make sure that the company is operated within a set of acceptable “regulations”. This will include the provision of timely reports and appropriate accounts. This document will be used most frequently for the occasion of a new lender providing capital to the business and taking a shareholding as part of the whole package. It is likely to be the lender's document as it is he who will see himself as needing the protection from the pre-existing shareholders. This agreement may also be used when one existing executive shareholder retires to become non-executive, or for other reasons decides to secure his position as a major lender to a company which has become controlled by others.

NZ-CP105 is suitable for circumstances where two or more shareholders are forming a new company to work together on a project. The project could be of any length, but is intended to have an end date. This could be, for example, a venture to develop a property, engage in property dealing, set up a website for sale, or buy a company specifically to sell off its assets. The shareholders may or may not be directors. Their contributions by way of loans may be different. One or more may work part time or not at all. One may be a “hands off” lender.

NZ-CP106 has been drafted specifically for a family situation where an executive director retires but remains a shareholder, perhaps to avoid inheritance tax on his death, and still wants to know that his interest is safe. This may include the provision of timely reports and appropriate accounts. This is a short form agreement which does not include the valuation letter to accountants because it may suit the family best if there is some “flexibility” in the basis of valuation. Neither are provisions included for buyout of shares of a shareholder leaving. It is assumed that the family will make their own arrangements in that regard. The agreement is concerned principally with the nitty gritty of day to day control and operation.

NZ-CP110 contains extended warranties which are intended to be used only in a lending situation as they protect the lender. They are not relevant to an agreement which does not involve a loan. The document includes the text for addition to the shareholders agreement which introduces the warranties in a schedule. Around 85 warranties are provided, but you may find only 50 are relevant to the type of business with which you are concerned. Of those, only 10 or 20 are of sufficient importance to you to be included in the agreement. Flexible enough for you to choose only those that apply to your situation.

Key features:

• comprehensive templates - delete what you do not need;
• define actions where shareholder consent is required;
• limit the freedom of executive director or majority shareholders;
• use of plain English.

These documents (except NZ-CP106) include provisions for:

• subscriptions for shares (new companies only);
• who shall be directors;
• company's obligations;
• actions for which shareholder consent is required
• new intellectual property;
• alternative end games / exit scenarios;
• transfer of shares and right of pre-emption with full procedure;
• matters following transfer;
• transfers of shares on death;
• conflict with the articles;
• provision for mediation;
• other legal points.

The 89 individual warranties are in sections relating to: