Commercial & Corporate
Shareholders' agreements and investing in a company
Going into business with friends, family or an outside investor usually starts on trust. A shareholders' agreement puts the rules in writing while everyone still agrees: who decides what, how profits are shared, and how someone can leave. Sun Lawyers drafts and reviews shareholders' agreements and share investment documents for small and medium businesses. We work in English, Mandarin and Cantonese.
Book a consultationWhen you need this
- Two or more people are setting up a company together.
- An investor is buying in, or you are investing in someone else's business.
- The company is owned 50/50 and there is no agreed way to break a deadlock.
- A family member, founder or key employee is being given shares.
- A shareholder wants to leave and there is no agreed price or process.
What we do
- Draft a shareholders' agreement for your company, or review one prepared by the other side.
- Check the company's constitution and ASIC records before you invest.
- Prepare or review the share subscription or share sale documents for a new investor.
- Advise minority and incoming shareholders on the protections worth asking for.
- Update an existing agreement when the shareholders, their roles or the funding change.
Points worth knowing
- A company is run under its constitution, the "replaceable rules" in the Corporations Act 2001 (Cth), or a combination of both. These operate as a contract between the company and each shareholder, and between the shareholders themselves.
- The Corporations Act does not require a company to have a shareholders' agreement. It is a separate contract that the shareholders choose to make.
- Where the replaceable rules apply and the constitution has not changed them, a proprietary company must offer new shares to the existing holders of shares of that class first, in proportion to their holdings, and the directors may refuse to register a transfer of shares. The constitution can displace or modify these default rules, and a shareholders' agreement can add its own.
- If a company's affairs are conducted in a way that is oppressive to, unfairly prejudicial to or unfairly discriminatory against a shareholder, the court can make orders, including an order for the purchase of that shareholder's shares. An exit clause agreed in advance is usually a faster and cheaper route than court proceedings.
How we work
- 01
A first conversation in English, Mandarin or Cantonese about who the shareholders are, what each is contributing and what concerns you.
- 02
Before any work starts, we confirm the scope of work and our fees in writing.
- 03
We draft or review the documents, explain them in plain language, and negotiate changes with the other side where needed.
Common questions
We are close friends. Do we really need an agreement?
The law does not require one. Without one, you rely on the company's constitution and the default rules in the Corporations Act. Those default rules do not give a shareholder who wants to leave a right to be bought out, and they do not say how a price is to be set.
I am investing in an existing business for a minority share. What should I check first?
At a minimum: the company's ASIC record and current shareholders, its constitution and any existing shareholders' agreement, its financial statements and debts, and the rights attached to the shares you will receive. We can review these and the investment documents before any money is paid.
The company is already trading. Is it too late to sign one?
No. A shareholders' agreement can be signed at any time, provided the people who are to be bound by it agree to sign.
Related reading
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This page is general information about the law applying in New South Wales and is not legal advice. Please contact us about your own situation.
Last updated: October 2026