Shareholders Agreements

Shareholders’ agreements and inconsistency clauses

The case of Cody v Live Board Holdings Limited [2014] NSWSC 78 (Cody) highlights the need for careful drafting of Shareholders’ Agreements to ensure that there is no duplication of clauses in company constitutions. Shareholders’ agreements usually contain what’s known as an “inconsistency clause”. Such inconsistency clauses attempt to resolve ambiguity between overlapping or conflicting clauses in Constitutions and Shareholders Agreement in favour of the Shareholders’ Agreement. Cody provides guidance on the applicability of inconsistency clauses.

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Top 7 mistakes made in Shareholders’ Agreements

Shareholders Agreements’ or “Business Wills” as recently referred to by Paul Betti of Australian Financial Advisers, are commonly created at the beginning of a business venture.  They attempt to regulate the conduct of the shareholders who are establishing a new venture and apply not only to Pty Ltd Companies, but to Partnerships and other commercial entities.
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