Drag along and tag along rights are important forms of investment realisation in shareholders’ agreements. Tag along rights protect minority shareholders in the event that a majority shareholder (or a group of shareholders representing a majority) exits the company. Drag along rights, on the other hand, favour majority shareholders (or group of shareholders representing a majority) who want to compel minority shareholders to join a sale.

Reserved matters are key decision-making powers that are reserved in a shareholders’ agreement for the shareholders of a company. They ensure that certain matters or actions cannot be undertaken by the company or its subsidiaries without the approval or special majority of the shareholders.

A shareholders agreement may include restraint clauses which seek to prevent a shareholder from competing with the company, disclosing confidential information and/or soliciting the company’s clients or employees.

Exit mechanisms and options refer to the provisions and processes included in shareholders’ agreements which enable shareholders to exit a company and/or dispose of their shares. Exit mechanisms and options are crucial components of shareholders’ agreements because they provide shareholders with a means of realising the value of their investment in the company and provide a mechanism for transferring ownership of the company to new investors and shareholders.

A well drafted shareholders’ agreement will include provisions pertaining the composition of the board of directors. Board composition clauses are essential for determining the governance structure and management of a company and play a crucial role in protecting the interests of shareholders.

Deadlocks between shareholders can be costly, time-consuming and detrimental to the success of a business. A deadlock occurs when the shareholders of a company cannot agree on a decision and no side has the majority vote, leading to stalemate in the company’s operations and decision-making.

One of the most important things to consider when forming a company in Australia is the legal documentation that you use to govern the business. Many founders and investors make the mistake of relying solely on the Australian company constitution, failing to recognize that it may not provide the depth of protection that they need. If you want to ensure that your company is protected, then it is essential to understand the difference between an Australian company constitution and a shareholders agreement.

The Lean Startup Methodology revolutionized the way startups are launched and sustained. This agile approach has been swiftly adopted by many businesses worldwide, resulting in significantly more efficient and cost-effective operations. However, despite its evident benefits, the Lean Startup Methodology may not be the perfect fit for every business. In this article, we will explore in detail what the Lean Startup Methodology is and weigh its pros and cons compared to other traditional business strategies.

Pre-emptive rights ensure fairness in the issuance of new shares by allowing existing shareholders to acquire shares prior to those shares being offered to third parties.

A shareholders agreement is a document which sets out the rules and processes which apply to the shareholders of a company. It determines the rights and obligations of shareholders, as well as governing the relationship between company directors and shareholders.