When starting a business in New Zealand, it is important to consider all aspects of its operations, including shareholder agreements. A shareholder agreement is a legally binding contract between a company and its shareholders that outlines the rights and obligations of each party. This article will discuss the key elements of a shareholders agreement in New Zealand.
1. Ownership and shareholding
The shareholder agreement should establish the ownership structure of the company and the percentage of shares that each shareholder owns. This will help avoid disputes in the future regarding the ownership of the company.
2. Management and decision-making
The agreement should outline the decision-making process and how management responsibilities are divided among the shareholders. This includes who has the authority to make decisions, how decisions are made, and what happens when there is a disagreement among shareholders.
3. Share transfer and ownership transfer
The agreement should specify the conditions under which shares can be transferred or sold, including any restrictions or rights of first refusal for existing shareholders.
4. Funding and capitalization
The agreement should outline how capital is raised for the company and how future funding will be managed. This includes the conditions for raising capital, the types of investments, and how new shareholders will be added.
5. Dispute resolution
If a dispute arises, the agreement should specify the process for resolving it. This may involve mediation, arbitration, or litigation, and should be considered in advance to minimize the potential for disagreements.
6. Exit strategy
The agreement should include an exit strategy for all shareholders, including how and when they can sell their shares and what happens in the event of a company sale or liquidation.
In conclusion, a shareholders agreement is an important document for any New Zealand business. It can help avoid disputes and provide clarity on ownership, management, funding, and other important aspects of a company`s operations. With clear and comprehensive terms in place, shareholders can work together to ensure the success of the business.