{"id":54665,"date":"2021-06-04T10:12:35","date_gmt":"2021-06-04T02:12:35","guid":{"rendered":"https:\/\/zegal.com\/?post_type=zegal_videos&#038;p=54665"},"modified":"2025-03-25T18:15:36","modified_gmt":"2025-03-25T10:15:36","slug":"three-reasons-you-need-a-shareholders-agreement","status":"publish","type":"zegal_videos","link":"https:\/\/zegal.com\/en-au\/zegal_videos\/three-reasons-you-need-a-shareholders-agreement\/","title":{"rendered":"Three reasons why you need a shareholders agreement for your business"},"content":{"rendered":"\n<div>\n<p>It&#8217;s not a legal requirement, so why do lawyers insist you need a solid Shareholders&#8217; Agreement?<\/p>\n<p>Delphine Tse, Senior Associate at <strong>ELLALAN<\/strong>, gets straight to the point in this episode of our Let&#8217;s Chat Legal series of video podcasts.<\/p>\n<p><!--\n\n\n<div class=\"responsive-embed widescreen\" style=\"padding-top: 20%;\"><div class=\"lyte-wrapper\" title=\"Three reasons why you need a shareholders agreement for your business. Ft. Delphine Tse from ELLALAN\" style=\"width:640px;max-width:100%;margin:5px;\"><div class=\"lyMe\" id=\"WYL_lr6OfFUDULs\" itemprop=\"video\" itemscope itemtype=\"https:\/\/schema.org\/VideoObject\"><div><meta itemprop=\"thumbnailUrl\" content=\"https:\/\/zegal.com\/wp-content\/plugins\/wp-youtube-lyte\/lyteCache.php?origThumbUrl=https%3A%2F%2Fi.ytimg.com%2Fvi%2Flr6OfFUDULs%2Fhqdefault.jpg\" \/><meta itemprop=\"embedURL\" content=\"https:\/\/www.youtube.com\/embed\/lr6OfFUDULs\" \/><meta itemprop=\"duration\" content=\"PT2M54S\" \/><meta itemprop=\"uploadDate\" content=\"2021-06-04T02:09:10Z\" \/><\/div><div id=\"lyte_lr6OfFUDULs\" data-src=\"https:\/\/zegal.com\/wp-content\/plugins\/wp-youtube-lyte\/lyteCache.php?origThumbUrl=https%3A%2F%2Fi.ytimg.com%2Fvi%2Flr6OfFUDULs%2Fhqdefault.jpg\" class=\"pL\"><div class=\"tC\"><div class=\"tT\" itemprop=\"name\">Three reasons why you need a shareholders agreement for your business. Ft. Delphine Tse from ELLALAN<\/div><\/div><div class=\"play\"><\/div><div class=\"ctrl\"><div class=\"Lctrl\"><\/div><div class=\"Rctrl\"><\/div><\/div><\/div><noscript><a href=\"https:\/\/youtu.be\/lr6OfFUDULs\" rel=\"nofollow\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/zegal.com\/wp-content\/plugins\/wp-youtube-lyte\/lyteCache.php?origThumbUrl=https%3A%2F%2Fi.ytimg.com%2Fvi%2Flr6OfFUDULs%2F0.jpg\" alt=\"Three reasons why you need a shareholders agreement for your business. Ft. Delphine Tse from ELLALAN\" width=\"640\" height=\"340\" \/><br \/>Watch this video on YouTube<\/a><\/noscript><meta itemprop=\"description\" content=\"It&#039;s not a legal requirement, so why do lawyers insist you need a solid Shareholders&#039; Agreement? Delphine Tse, Senior Associate at ELLALAN, gets straight to the point in this episode of our Let&#039;s Chat Legal series of video podcasts. Transcript: &quot;In this video, I am going to share with you the 3 main reasons to have a shareholder agreement as soon as you have more than one shareholder and even before your business commences operation. This is the case even where the company has already had in place the Articles of Association \u2013 which is the document that outlines the constitution and governance of the company such as how a valid shareholders\u2019 meeting should be convened. The most compelling reason to have a Shareholder Agreement is that the articles of association are simply not good enough. More often than not, founders adopt the model articles that are easily available, which in fact, may not be adequate in addressing a couple of issues that tend to attract problems down the road such as \u2013 not having provisions that restrict transfers of shares or not having provisions that address the issue of deadlock, in particular, where there is a 50\/50 shareholding in the company. A Shareholder Agreement would therefore be a more appropriate document to separately deal with these kinds of issues \u2013 and to provide mechanisms to resolve such disputes. The second reason for having a Shareholder Agreement is confidentiality. This is because, the Shareholder Agreement is a private document and does not have to be filed with the company registry as opposed to the Articles and Associations, which can be viewed by anyone. Finally \u2013 confidentiality and non-compete obligations must be imposed on the shareholders, especially on the investors. It is not uncommon for investors to have stakes in a couple of companies within the same industries. To prevent these investors from sharing confidential information with your competitors, confidentiality and non-compete clauses are vital! We regularly handle disputes where companies complain that certain shareholders\/directors are diverting businesses or sharing confidential information for their own benefits, and these companies regret not having a Shareholder Agreement in place. So, take home message \u2013 make sure you have a properly drafted shareholder agreement in place if there are more than one shareholders in your company. If you have any questions about this topic, please do not hesitate to contact us. For more information about us, pls visit our firm\u2019s website www.ellalan.com or follow us on Linkedln. Thank you for watching and see you again in our next video.&quot; First featured on https:\/\/zegal.com\/zegal_videos\/three-reasons-you-need-a-shareholders-agreement\/ Founded in 2013, Zegal is the fastest growing LegalTech company operating across the Asia Pacific and Europe. Today, business users and lawyers across the globe trust Zegal\u2019s software to solve legal problems in an affordable and efficient way. Zegal is led by a talented team of 60 employees and has offices in Hong Kong, Singapore, Nepal, Australia, New Zealand, and the UK. Zegal has been featured in the New York Times, Forbes, and Huffington Post, and was recently recognized in the South China Morning Post as an emerging LegalTech company in the artificial intelligence space. Website: https:\/\/zegal.com\/ Facebook: https:\/\/www.facebook.com\/getzegal\/ Instagram: https:\/\/www.instagram.com\/zegal_times\/ LinkedIn: https:\/\/www.linkedin.com\/company\/getzegal\/\"><\/div><\/div><div class=\"lL\" style=\"max-width:100%;width:640px;margin:5px;\"><\/div><\/div>\n\n\n--><\/p>\n<p>Transcript:<br>&#8220;In this video, I am going to share with you the 3 main reasons to have a shareholder agreement as soon as you have more than one shareholder and even before your business commences operation.<\/p>\n<p>This is the case even where the company has already had in place the Articles of Association \u2013 which is the document that outlines the constitution and governance of the company such as how a valid shareholders\u2019 meeting should be convened.<\/p>\n<p>The most compelling reason to have a Shareholder Agreement is that the articles of association are simply not good enough.<\/p>\n<p>More often than not, founders adopt the model articles that are easily available, which in fact, may not be adequate in addressing a couple of issues that tend to attract problems down the road such as \u2013 not having provisions that restrict transfers of shares or not having provisions that address the issue of deadlock, in particular, where there is a 50\/50 shareholding in the company.<\/p>\n<p>A Shareholder Agreement would therefore be a more appropriate document to separately deal with these kinds of issues \u2013 and to provide mechanisms to resolve such disputes.<\/p>\n<p>The second reason for having a Shareholder Agreement is confidentiality. This is because, the Shareholder Agreement is a private document and does not have to be filed with the company registry as opposed to the Articles and Associations, which can be viewed by anyone.<\/p>\n<p>Finally \u2013 confidentiality and non-compete obligations must be imposed on the shareholders, especially on the investors. It is not uncommon for investors to have stakes in a couple of companies within the same industries.<\/p>\n<p>To prevent these investors from sharing confidential information with your competitors, confidentiality and non-compete clauses are vital!<\/p>\n<p>We regularly handle disputes where companies complain that certain shareholders\/directors are diverting businesses or sharing confidential information for their own benefits, and these companies regret not having a Shareholder Agreement in place.<\/p>\n<p>So, take home message \u2013 make sure you have a properly drafted shareholder agreement in place if there are more than one shareholders in your company.<\/p>\n<p>If you have any questions about this topic, please do not hesitate to contact us. For more information about us, pls visit our firm\u2019s website www.ellalan.com or follow us on Linkedln.<\/p>\n<p>Thank you for watching and see you again in our next video.&#8221;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>It&#8217;s not a legal requirement, so why do lawyers insist you need a solid Shareholders&#8217; Agreement?<\/p>\n<p>Delphine Tse, Senior Associate at ELLALAN, gets straight to the point in this episode of our Let&#8217;s Chat Legal series of video podcasts.<\/p>\n","protected":false},"author":9,"featured_media":57160,"menu_order":0,"template":"","format":"standard","videos_type":[13693],"class_list":["post-54665","zegal_videos","type-zegal_videos","status-publish","format-standard","has-post-thumbnail","hentry","videos_type-podcasts"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v20.8 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Three reasons why you need a shareholders agreement for your business | Zegal Australia<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/zegal.com\/en-au\/wp-json\/wp\/v2\/zegal_videos\/54665\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Three reasons why you need a shareholders agreement for your business\" \/>\n<meta property=\"og:description\" content=\"It&#039;s not a legal requirement, so why do lawyers insist you need a solid Shareholders&#039; Agreement?  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