When can I use a Shareholder Agreement?

To start with you need to have a registered Australian company.

Your company can be either a proprietary company or a public company, depending on a number of factors. If you are a small to medium sized business, you most likely have set up a proprietary company limited by shares (these are the most common companies).

Check out the diagram below for a look at the different kinds of companies out there.

If you are a sole director and a sole owner (shareholder) of your company, you usually won’t need a Shareholder Agreement (unless you’re really keen on signing an agreement with yourself).

If there is more than one owner of the business, or more than one person responsible for running the business, you’ll want to have a Shareholder Agreement.

There are other kinds of corporate structures for businesses out there - like trusts, partnerships and sole traders. Shareholder Agreements are really specific to companies, but other structures will have their own 'governing documents' - that is, documents that will set out roles and responsibilities.

Have you used a shareholder agreement before? What has your experience been like to date with them?