Shareholders agreement drafting workflow
A good shareholders agreement anticipates disputes before they happen. The drafting job is to capture the commercial deal in clauses that dovetail cleanly with the company's constitution and the replaceable rules under the Corporations Act.
This is an 8-step workflow for drafting a shareholders agreement for an Australian proprietary limited company. It covers governance, transfers, exit, deadlock, and alignment with the constitution and the Corporations Act 2001 (Cth).
Before you start
- Company incorporated and ASIC details confirmed
- Cap table and class rights clarified
- Term sheet or heads of agreement signed by all parties
- Current constitution on file
The workflow
Review constitution and replaceable rules
Read the constitution alongside the replaceable rules. Identify any clauses the shareholders agreement will override or supplement.
Capture the commercial deal
Draft the recitals and business definition clauses that capture the deal — purpose of the company, contributions, and the principles the parties have agreed.
Draft governance and board clauses
Draft clauses on board composition, quorum, chair, reserved matters, shareholder consent matters, and information rights.
Draft share issue and pre-emptive rights
Draft clauses on issuing new shares, anti-dilution protection, and pre-emptive rights on issue and transfer. Ensure the drag-along and tag-along rights are consistent.
Draft transfer and exit clauses
Draft clauses dealing with permitted transfers, forced sale triggers, good leaver / bad leaver, valuation mechanism, and any put or call option rights.
Draft deadlock and dispute clauses
Draft deadlock resolution clauses — escalation, mediation, shotgun clause, or buy-sell — and the dispute resolution pathway.
Add restraints, IP, and confidentiality
Draft restraint of trade clauses (with cascading periods and areas), IP assignment, and confidentiality obligations binding on all shareholders and former shareholders.
Circulate, negotiate, and execute
Circulate the draft, mark up against comments, finalise the schedules, and have the agreement executed by all shareholders and the company.
What you will have at the end
An executed shareholders agreement that records the commercial deal, binds all parties, and sits cleanly alongside the company constitution.
Common issues
- Clashes between the shareholders agreement and the constitution
- Restraint clauses drafted too broadly and unenforceable
- Drag-along thresholds set without testing minority protection
- Valuation clauses that reference non-existent methodologies
- Missing ASIC lodgement triggers if share structure changes
Run this workflow on a real matter
Quillio drafts shareholders agreement clauses from your term sheet, cross-checks against the constitution, and tests drag-along and tag-along interactions. See /practice-areas/commercial-lawyers or /free-trial.
General guide only — not legal advice. Every cap table and investor dynamic differs; tailor accordingly.
Try this workflow with Quillio.
Quillio can run this workflow on a real matter, with citations to current AU authority on every step. The free trial requires no credit card.
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