What is a Shareholders Agreement in Western Australia?

Shareholders Agreement or Partnership Agreement — Which Do You Need?

It depends on how your business is set up.

If you’re running the business through a company, you need a shareholders’ agreement to set the rules between owners, investors, and directors.
If you’re operating without a company, as individuals in business together, you need a partnership agreement.

The two are not interchangeable. Each comes with different legal risks, tax outcomes, and exit rules. Choosing the right agreement from the start is essential for protecting your business and avoiding disputes down the track.

See our guide to Partnership Agreements here.

Why a Shareholders Agreement Is Important for WA Businesses

In Western Australia, many private companies are run by founders, families, or small investor groups. Without a shareholders’ agreement, disputes are resolved under default company law, which rarely reflects how the business actually operates.

What Happens If You Don’t Have a Shareholders Agreement?

Without a shareholders’ agreement, issues such as shareholder exits, deadlocks, dividends, and control are governed by statute, increasing the risk of litigation and business disruption.

Key Clauses in a Shareholders Agreement

While every shareholders’ agreement should be customised to the specific business, certain provisions are commonly included for compliance and commercial clarity.

• Share ownership and transfer restrictions
• Capital contributions and funding obligations
• Voting rights and reserved matters
• Dividend policy
• Exit, buy-out, and valuation mechanisms
• Dispute resolution

By clearly documenting these issues, shareholders gain confidence that important matters will be handled as intended—not only during disputes, but also during capital raisings, profit distributions, mergers or acquisitions, and changes in ownership or control.

Shareholder Exit and Dispute Resolution

A well-drafted shareholders’ agreement provides certainty around exits, valuation, and dispute resolution, helping WA businesses avoid costly shareholder disputes.

Shareholders Agreements for WA Small and Medium Businesses

Every company is different. A tailored shareholders’ agreement reflects the commercial reality of your business and evolves as the company grows.

A well-structured agreement anticipates future scenarios such as the exit of a shareholder, succession planning, or the sale of the business, providing certainty and reducing the risk of costly disputes.

Ultimately, a tailored shareholders’ agreement is not just a legal document — it is a practical business tool. It protects the interests of all shareholders, strengthens relationships between business partners, and provides stability so your business can focus on sustainable growth with confidence.

Shareholders Agreements for WA Businesses

If you own a company with other people — whether co-founders, family members, or investors — a shareholders agreement sets the rules that keep the business running smoothly.

A shareholders’ agreement is a legally binding document that explains:

• who owns what,
• how decisions are made,
• how profits are paid, and
• what happens if a shareholder wants to exit or there is a dispute.

Do You Need a Shareholders Agreement?

If your business operates through a company, a shareholders’ agreement is the right document.

If you operate without a company, you may need a partnership agreement instead.

Getting this wrong can expose you to unnecessary risk.

The Role of Commercial Contracts and Business Lawyers

Drafting a Fit-For-Purpose Shareholders Agreement

Although shareholder agreement templates are readily available online, generic documents often fail to address specific risks or commercial objectives. A well-crafted agreement requires careful consideration of governance, funding, exit strategies, and compliance with applicable laws.

Independent legal advice is particularly valuable where shareholders have differing expectations, bargaining power, or levels of involvement in the business.

Setting Your Company Up for Growth

At Barnard Lawyers, we assist clients in looking beyond initial negotiations when preparing shareholders’ agreements. Our commercial lawyers have extensive experience advising shareholders and companies across Western Australia’s business landscape.

We work closely with our clients to establish clear, practical frameworks that support long-term stability, growth, and succession.

Why WA Businesses Use Shareholders Agreements

Without one, disputes are resolved under default company law — often leading to deadlock, court action, or forced exits. A tailored agreement gives clarity, certainty, and protection.

How Barnard Lawyers Can Help

Barnard Lawyers advises WA small and medium businesses on shareholders agreements that are practical, enforceable, and built for growth. Contact us today for tailored advice.

📞 08 6114 5920
✉️ info@barnardlawyers.com.au

Please note: This article is for information and education purposes and is not legal advice.