60 - Why you need a Shareholders Agreement

Shareholders’ Agreements: The Missing Document That Can Save Your Business Melissa Bush explains why every Australian company with more than one shareholder needs a tailored shareholders’ agreement, distinct from a public constitution or the Corporations Act replaceable rules, because it governs owners’ relationships, confidentiality, and key risk areas like share transfers, valuation, contributions, exit rights, and deadlock. She illustrates the consequences through Pitak v Sudtipatudom (NSW Supreme Court, 2025), where two couples informally agreed to run a Loftus Lane, Sydney café 50/50, but the operating company (SLT) was solely owned and directed by one party, with nothing in writing; disputes over profit vs revenue, alleged $77,745.32 cash contributions, and control escalated into years of litigation, ending with claims dismissed and the café liquidated. Bush outlines common mistakes: relying on trust, using templates, never reviewing agreements, and not involving accountants/financial planners and invites listeners to contact Shire Legal or join the Café Kickstart course. 00:00 Cafe Dream Turns Sour 01:27 Why You Need One 03:13 Podcast Intro Disclaimer 04:20 What It Is Exactly 04:33 Constitution vs Agreement 08:01 Who Actually Needs It 08:36 Trust Is Not Enough 10:03 The Pitak Case Setup 13:26 Court Issues And Rulings 17:54 How An Agreement Fixes It 21:23 Exit And Deadlock Clauses 24:21 Common Mistakes To Avoid 29:19 Wrap Up And Next Steps https://www.businessknowhow.com.au/blog/partnership_0925