Shareholders agreement review checklist
Shareholders agreements sit alongside the company constitution and govern the private arrangements between members. This checklist walks through a standard review.
This is a 12-step checklist for reviewing an Australian shareholders agreement. It covers governance, board composition, reserved matters, transfer restrictions, deadlock resolution, and exit mechanics.
The checklist
Confirm consistency with constitution
Check the agreement does not conflict with the company's constitution and replaces any replaceable rules cleanly.
Review board composition
Check director appointment rights, director numbers, and quorum requirements.
Check reserved matters
Review the schedule of reserved matters requiring shareholder or supermajority approval.
Review share classes and rights
Confirm share classes, dividend rights, voting rights, and any preference entitlements.
Check pre-emptive rights on issue
Confirm existing shareholders have pre-emptive rights on any new share issue.
Review transfer restrictions
Check transfer restrictions, pre-emptive rights on sale, tag-along, and drag-along provisions.
Check valuation mechanism
Review the fair value mechanism on compulsory transfers — expert determination or formula.
Review deadlock resolution
Check deadlock provisions — Russian roulette, Texas shoot-out, mediation, or casting vote.
Check good leaver/bad leaver
Review founder leaver provisions and the vesting or compulsory transfer consequences.
Check exit mechanics
Review IPO, trade sale, and drag-along trigger conditions for exits.
Review restraints
Check non-compete and non-solicit restraints during employment and after exit.
Check dispute resolution
Confirm the dispute resolution pathway — expert determination, mediation, or arbitration.
When this checklist applies
Use this checklist when reviewing a shareholders agreement at incorporation, a capital raise, or on entry of a new investor.
Common pitfalls
- Inconsistency between the constitution and the shareholders agreement
- Drag-along triggers set at unrealistically low thresholds
- No deadlock mechanism for 50/50 companies
- Overbroad restraints that are not enforceable
- Missing founder vesting for early-stage companies
Run this checklist on a real matter
Quillio reviews shareholders agreements against the Corporations Act and flags governance and exit risks. See /practice-areas/commercial-lawyers or start a free trial.
This checklist is a general guide. Always advise on tax and ASIC implications of share structure changes.
Use this checklist on your matter.
Quillio can run this checklist on a specific NSW conveyancing matter — confirm each item, calculate adjustments, and generate the supporting documents. The free trial requires no credit card.
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