The Purpose Of Shareholder Agreements

April 27, 2021 Beata Cremonesi 0

shareholder agreement

Establishing one’s own business is not an easy task. It requires lot of effort, experience and the investment of money. There are times when an individual is not capable of carrying out all of these activities all by himself. He needs an expert along with him to establish this business venture. Sometimes this expert provides the financial support while there are times when an expert advice is given by this another professional person. This second person who joins hands with certain business person is known as a shareholder. He invests his money in the business and becomes a partner in the business venture. However; everything must be done professionally in the world of business so, the contract is formed between the shareholders. This contract is known as a shareholder agreement in which all of the fair rights and conditions are written down which are then signed by both the parties. In this article; we will be discussing about the purpose of shareholder agreements in mornington peninsula.

Shareholder agreements:

A shareholder agreement is like a contract that is formed in the presence of the all of the shareholders of a particular company. This contract or agreement is signed by the shareholders after their joint consensus. The most common things that are included in such an agreement are capitalization table, pre-emptive right, points of incorporation and other related aspects. There is a preamble that identifies the parties who have joint hands in the business venture along with the list of recitals. A detailed description about the insurance policy and other such important clauses are written down in this agreement.

The purpose of shareholder agreement:

The main purpose of this agreement is that if any dispute or disagreement arises among the shareholders with respect to the business and they want to change the conditions as per their terms then there will be a legal paper work in which everything has been legally accepted by both the parties to prove that nothing can be changed and must be accepted as it has been agreed. This single piece of a paper can help in resolving the issue that could have caused loss in the business.


The introduction of legal contract has proved to be quite beneficial for long term runs because whenever any party tries to create an issue the there will be a contract to save you from such situation. Conveyancing is another such field of law in which contract is formed among the related parties for the transfer of the property ownership. This contract becomes the kind of a proof in case of any turn of events.


It is always better to play safe than to be sorry for later on and exactly for such purposes the concept of legal contracts has been introduced. One such legal contract named as shareholder agreement is formed among the parties who are partners in a certain business and share the rights as per their involvement. “Bayside solicitors” provide the best services of conveyancing, shareholder agreements, etc. For more information visit our website: