Shareholders' agreements

A shareholder agreements are a necessity for the owners of any company. They set out the rights of one shareholder against another. Majority and minority owners need a comprehensive agreement to protect their interests, their equity, and possibly their debt investment.

Our agreements do just that, covering a large range of matters, simply and logically.


Shareholders' agreement: standard version

211 Reviews

An agreement between the owners of a new company in any industry.

  • comprehensively covers issues that matter for founders and for investors
  • can be used to re-balance the rights and obligations of minority shareholders

The template is drawn on 20 years of practical experience and includes all the options and explanations you need to enable you to craft the exact document you want.

Shareholders' agreement: single majority owner retains control

13 Reviews

This document provides for the legal and management issues that established companies face. It helps you to protect your rights against other shareholders and directors, prevents disputes, and clarifies the separate roles of stakeholders within the business.

Shareholders' agreement: joint venture through company

2 Reviews

This template is for a company that is the vehicle for a joint venture operated by two or more parties. The shareholders in the project could be two or more individuals or companies, whilst the venture could be any business, from a property renovation to the design and manufacture of an item that requires the specialist expertise and skills of all partners. Use for a project that has a purpose and structure over a short time scale.

Shareholders' agreement: professional investors

7 Reviews

Includes the provisions that a large professional or institutional investor such as a business angel, venture capital or private equity investor would require to protect their investment.

It also considers the provisions of minority shareholders, who by virtue of the circumstances are likely to be the founders and friends and family of the founders.

Additional features to other documents include:

  • drag along and tag along rights
  • key man insurance
  • rights of preference
  • rights of first offer
  • increased reporting requirements

Shareholders' agreement: property management company

An agreement where each shareholder is the owner of his or her own leasehold property within a building or scheme that is managed by the company.

It provides clear and practical routes through the contentious areas of who controls what, and leaves the owners with an arrangement that maximises efficient, democratic management of the communal areas of their property.

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Written in plain English

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Guidance notes included

You don’t need legal knowledge to use our documents. We explain what to edit and how in the guidance notes included at the end of the document.

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Up to date with the latest law

Our documents comply with the latest relevant law. Our lawyers regularly review how new law affects each document in our library.

What is a shareholders agreement?

A shareholders agreement is a legally binding, private document that sets out further powers, rights and obligations that the owners have to each other and the company, beyond those that already exist under law or through the constitution of the company.

In New Zealand, the Companies Act 1993 provides the over-arching rules under which all companies must operate including the rights and responsibilities of shareholders.

The company constitution sets out how an individual company is run by the board of directors and the shareholders. This document records how the owners control and manage the business between themselves, providing the basic business structure. Many of the matters covered are procedures, such as how meetings are called, or how an offer to buy shares should be made.

Further to that joint framework of the Companies Act 1993 and a company's constitution, using a shareholders' agreement, there is enormous scope to decide who may do what, and under what circumstances.

Why do I need a shareholders agreement with other owners?

Having a shareholders' agreement in place is essential for both majority and minority owners, for a small business or a large one.

The reason why to write one is not one of compliance with the law, but for the protection of your personal interests - even if you are a majority shareholder who owns more than half of the total share capital.

Minority shareholders are likely to want greater control over the decisions that influence the value of their holding than the law gives them by default.

A majority shareholder may wish to make sure that minority shareholders cannot sell their shares easily to anyone who may have different ideas about the direction the company should take, or that a previous employee who left the company as a result of poor behaviour (commonly known as a bad leaver) has no further say in the company.

Determining roles

Executive directors are employees, accountable to the company and its shareholders. Where directors are also stock holders, as is so often the case, a director may be able to make decisions that benefit themselves as a shareholder, but which are not in the interests of their fellow owners.

A shareholders agreement fulfils the role of an operating agreement. It allows you to set the limits of director power, and clarify what matters should be referred to the share holders for a decision. Doing so helps to ensure that owners are kept informed and that the most important decisions are made by them as a group, and not by the directors.

The converse applies too. An agreement can also define what decisions a shareholder-director may take freely, without requiring a members meeting, allowing confident, decisive action when it is needed.

An agreement can also help resolve deadlock in decision making between the owners as shareholders. Without such provisions, it is possible that a situation that is not beneficial for the company or any owner continues indefinitely.

Rebalance shareholder power on issues that are important to you

By default, voting power is in proportion to shares held. Your agreement can over-ride this basis, allowing you to specify the rules as to how decisions on subjects important to you are made. Minority shareholders can be given more say on certain issues.

You can go as far as to completely separate ownership and control: useful if some shareholders may not have experience or knowledge of running the company to allow them to make effective decisions. For family businesses and companies where some shareholders hold shares only as an investment, this ability to separate ownership from governance is likely to be a useful feature.

Control your investment

Having a written shareholders agreement in place can help prevent other owners from reducing the value of your investment by their actions. It can do this by setting out:

  • requirements for disclosure and for approval for certain actions such as large asset purchases
  • how issues of new shares are approved
  • how assets, time, and expertise brought into the business should be valued on sale
  • rights of refusal existing shareholders have over other prospective buyers when shares are offered for sale
  • what happens when one of the shareholders is dismissed for poor behaviour (known as a bad leaver)

Guard your privacy relating to management of the company

Some aspects of management can be recorded in the company's constitution. However, your shareholders agreement is a private document that you don't have to file with the Companies Office or make publicly available.

Only you and the other owners will know the arrangements you have. How your company is managed therefore remains confidential. By including confidentiality provisions, you can further control sensitive information.

Reduce the likelihood and cost of disputes

In any company, disputes arise between owners and other stakeholders. They can be expensive to resolve, and disruptive and detrimental to the on-going operation of the business.

Many matters are likely to be discussed at each annual general meeting of the members. Some will require immediate action and therefore will be voted on. Others will come under strategic or contingency planning, such as under what circumstances owners agree to a merger if approached.

The likelihood is that over a period of time, consensus might be forgotten on any single issue if there wasn't a vote.

Discussing these matters at the outset when starting a new business or when a new shareholder arrives and then recording them in writing limits the scope for a single member to scupper the plans of the other stockholders by claiming that they had never been involved in such decisions.

The inclusion of a deadlock clause and a dispute resolution procedure (which could be arbitration or mediation) within each shareholder agreement template makes resolving any that do occur easier.

Retain control in difficult situations

A shareholders agreement allows you to plan for the worst so as to keep the business going. Within it, you can set out what would happen should certain events occur, whether how you deal the sudden departure of a key founder or the withdrawal of a source of funding.

Writing one, together with the other owners, is a process that allows you collectively to evaluate the risks to each of you. It can help with business planning, especially for a new business.

Plan for exit

An owner may have ideas as to when they want to sell their shares and which ones of the remaining shareholders takes over their role. A shareholders agreement can ensure this happens.

The law in these shareholder agreements

The law relating to these documents is both corporate law (principally the Companies Act 1993) and commercial contract law.

Your shareholders agreement is always subject to constitution of your company. If you are putting one in place, it is usually a good time also to review and update your company's constitution to make sure that there are no conflicts between the two documents.

What customers thought
Great Service
I needed to find something to fill an organisational gap and found your shareholders agreement on the web. It was easy to download and make the minor tweaks necessary to protect our present and incoming shareholders. It's comprehensive and saved a bunch of time and legal expense in having something drawn up.
Peter Adams
Truly Comprehensive
Has done wonders for my new company. Was very detailed and had all the helpful comments on there as well.
Catherine Zahidi
Truly Valuable
Initially I was not sure how relevant it would be to New Zealand Companies Act law, however its been spot on.
It is a very cost effective way to get a full comprehension of what is required and what to be careful of even if you don't use the document; the information and explanation is invaluable.
Explanation of what each section is for and how to use is good but could still be further improved.
The benefit personally and for the company has been great.
I highly recommend this to start-up companies and others.
My final recommendation to Netlawman is to create a pack of documents for various start-up companies to help navigate all the stuff needed.
Shareholder Agreement
Directors Service agreement
and bundle these into a pack....;)
Justin Post
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