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Small Business Shareholder Agreement

Small Business Shareholder Agreement Template for New Zealand

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Key Requirements PROMPT example:

Small Business Shareholder Agreement

"I need a Small Business Shareholder Agreement for my new tech startup based in Auckland, which will have four founding shareholders with equal ownership, including two who will be working in the business full-time as directors."

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Document background
The Small Business Shareholder Agreement is a fundamental document for New Zealand companies with multiple shareholders, designed to establish clear guidelines for business ownership and operation. This agreement becomes essential when two or more parties hold shares in a small business, whether they are founders, family members, employees, or investors. It is specifically structured to comply with New Zealand corporate law, particularly the Companies Act 1993, while addressing common challenges faced by small businesses such as share transfers, decision-making processes, dispute resolution, and exit strategies. The agreement typically includes provisions for protecting both majority and minority shareholder interests, maintaining business continuity, and ensuring smooth succession planning, making it particularly valuable for family businesses and closely-held companies in New Zealand.
Suggested Sections

1. Parties: Identifies all shareholders and the company as parties to the agreement

2. Background: Sets out the context of the agreement, company details, and purpose

3. Definitions and Interpretation: Defines key terms and establishes rules for interpreting the agreement

4. Share Capital and Certificates: Details the company's share structure, classes of shares, and certification

5. Shareholders' Rights and Obligations: Outlines fundamental rights, voting powers, and obligations of shareholders

6. Management and Decision Making: Establishes governance structure, decision-making processes, and voting thresholds

7. Transfer of Shares: Details the process and restrictions for transferring shares

8. Pre-emptive Rights: Sets out existing shareholders' rights to purchase shares before they can be sold to outside parties

9. Valuation: Establishes methods for valuing shares for various purposes

10. Dividend Policy: Outlines the approach to declaring and paying dividends

11. Dispute Resolution: Establishes procedures for resolving conflicts between shareholders

12. Confidentiality: Defines confidential information and obligations to maintain confidentiality

13. General Provisions: Contains standard boilerplate clauses including notices, amendments, and governing law

Optional Sections

1. Tag-Along Rights: Protects minority shareholders by allowing them to join in the sale of shares by majority shareholders

2. Drag-Along Rights: Enables majority shareholders to force minority shareholders to join in the sale of shares

3. Put and Call Options: Provides mechanisms for forced buy-outs in specific circumstances

4. Non-Competition: Restricts shareholders from competing with the company

5. Intellectual Property Rights: Addresses ownership and protection of company IP when shareholders are involved in creation

6. Death/Incapacity Provisions: Specifies procedures for handling shares in event of death or incapacity

7. Employee Shareholder Provisions: Special terms for shareholders who are also employees

8. Family Trust Provisions: Special provisions for shareholders holding shares through family trusts

Suggested Schedules

1. Schedule 1: Company Details: Contains full company information, share structure, and current shareholdings

2. Schedule 2: Share Capital: Details of all share classes, rights, and current allocation

3. Schedule 3: Reserved Matters: List of decisions requiring special majority or unanimous approval

4. Schedule 4: Deed of Adherence: Template for new shareholders to sign up to the agreement

5. Schedule 5: Share Valuation Methodology: Detailed process and formulas for share valuation

6. Schedule 6: Tag and Drag Along Procedures: Detailed procedures for implementing tag and drag along rights

7. Appendix A: Shareholders' Contact Details: Current contact information for all shareholders

8. Appendix B: Company Constitution: Copy of the current company constitution

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Board
Business
Business Day
Company
Company Constitution
Confidential Information
Deed of Adherence
Director
Encumbrance
Fair Market Value
Financial Year
Group
Independent Expert
Insolvency Event
Material Breach
New Zealand
Ordinary Resolution
Ordinary Shares
Parties
Pre-emptive Rights
Purchase Price
Related Company
Reserved Matters
Security Interest
Share Capital
Shareholder
Special Resolution
Subsidiary
Tag-Along Notice
Tag-Along Rights
Transfer
Transferor
Transferee
Valuation Date
Working Day
Clauses
Interpretation
Share Capital
Share Transfers
Pre-emptive Rights
Tag-Along Rights
Drag-Along Rights
Share Valuation
Management and Control
Board Composition
Shareholder Meetings
Reserved Matters
Dividend Policy
Financial Matters
Information Rights
Confidentiality
Non-Competition
Non-Solicitation
Intellectual Property
Death and Incapacity
Default Events
Dispute Resolution
Deadlock Resolution
Exit Provisions
Buy-Sell Provisions
Put and Call Options
Termination
Assignment
Notices
Governing Law
Amendment
Entire Agreement
Severability
Further Assurance
Costs
Force Majeure
Relevant Industries

Professional Services

Retail

Technology

Manufacturing

Hospitality

Construction

Healthcare

Agriculture

Real Estate

Creative Industries

Consulting

Family Businesses

E-commerce

Food and Beverage

Software Development

Relevant Teams

Legal

Corporate Governance

Executive Leadership

Finance

Operations

Board of Directors

Company Secretariat

Risk Management

Compliance

Corporate Affairs

Relevant Roles

Business Owner

Company Director

Managing Director

Chief Executive Officer

Chief Financial Officer

Company Secretary

General Counsel

Legal Counsel

Corporate Lawyer

Business Development Manager

Founder

Co-founder

Partner

Board Member

Shareholder

Financial Controller

Operations Manager

Industries
Companies Act 1993: The primary legislation governing company formation, operation, and management in New Zealand. Contains provisions for shareholder rights, director duties, and company administration.
Contract and Commercial Law Act 2017: Provides the legal framework for contract formation and enforcement, which is essential for the shareholder agreement's validity and interpretation.
Financial Markets Conduct Act 2013: Regulates how financial products are created, promoted and sold, and the ongoing responsibilities of those who offer, deal and trade them.
Fair Trading Act 1986: Ensures fair trading practices and protects against misleading and deceptive conduct in business relationships.
Income Tax Act 2007: Governs the tax implications of share ownership, dividend distributions, and company profits.
Takeovers Act 1993: Relevant for provisions regarding the sale and transfer of shares, particularly in cases of business succession or exit.
Personal Property Securities Act 1999: Important for provisions relating to using shares as security and protecting shareholder interests.
Disputes Tribunal Act 1988: Provides framework for resolving smaller disputes between shareholders and sets out dispute resolution procedures.
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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