What is a Shareholders Agreement?

A shareholders agreement (Shareholders Agreement) is a contract that attempts to regulate the rights and obligations of Shareholders or Members (used interchangeably) in the context of their ownership of securities in a company.  The company itself may also be a party to the Shareholders Agreement.

Shareholders Agreements are not compulsory like the Replaceable Rules or a Constitution as required by the Corporations Act 2001 (Cth) (Act).  On incorporation, or on obtaining an investor, many companies choose to regulate the rights and obligations of Members in addition to regulating various aspects of the management of the Company by preparing and executing such an Agreement. [Read more…]

What do Shareholders’ Agreements protect against?

A Shareholders Agreement is a contract that attempts to regulate the rights and obligations of Shareholders or Members (used interchangeably) in the context of their ownership of securities in a Company. [Read more…]

The $6.5Billon dollar mistake!

I finally had the opportunity to see the Social Network on DVD recently.   As a Lawyer, having felt like I had been in a very similar situation in a previous life (albeit we are not talking about a business any where near the size of Facebook), it was easy to recognise several points in time where Eduardo Saverin could have preserved the value of his equity in Facebook.

To put the gravity of this situation into perspective, if Eduardo Saverin’s share of Facebook had been maintained at thirty (30) percent, then his equity would be valued at $US7.5 billion dollars (at the time of writing this article) – calculated on the basis of his residual shareholding of $US75Million – that’s a $US 6.75 Billion dollar mistake! [Read more…]

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