--- title: Do you need a shareholders' agreement? Start with these 5 questions description: Discover why a shareholders' agreement is essential for your business. Answer these 5 key questions to safeguard your company's future and relationships. image: https://moranlaw.co/hubfs/AI-Generated%20Media/Images/Shareholders%20Agreement%20With%20Softer%20Lines.png --- [![dark-logo](https://moranlaw.co/hubfs/dark-logo.png) ![top-logo](https://moranlaw.co/hubfs/top-logo.png) ![dark-logo](https://moranlaw.co/hubfs/dark-logo.png) ![top-logo](https://moranlaw.co/hubfs/top-logo.png) ![dark-logo](https://moranlaw.co/hubfs/dark-logo.png)](https://moranlaw.co) - Our Services - [Intellectual Property](https://moranlaw.co/protecting-intellectual-property) - [Commercial and Corporate](https://moranlaw.co/commercial-and-corporate) - [For Families](https://moranlaw.co/for-families) - [Elevated Trust Management](https://moranlaw.co/elevated-trust-management) - [Not-For-Profit](https://moranlaw.co/not-for-profits) - [Privacy, Cyber and Data Security](https://moranlaw.co/privacy-cyber-and-data-security) - [Our Team](https://moranlaw.co/moranlaw-team) - [About Us](https://moranlaw.co/about) - [Careers](https://moranlaw.co/careers) - [Blog](https://moranlaw.co/blog) [Contact us](https://moranlaw.co/contact) - Our Services - [Intellectual Property](https://moranlaw.co/protecting-intellectual-property) - [Commercial and Corporate](https://moranlaw.co/commercial-and-corporate) - [For Families](https://moranlaw.co/for-families) - [Elevated Trust Management](https://moranlaw.co/elevated-trust-management) - [Not-For-Profit](https://moranlaw.co/not-for-profits) - [Privacy, Cyber and Data Security](https://moranlaw.co/privacy-cyber-and-data-security) - [Our Team](https://moranlaw.co/moranlaw-team) - [About Us](https://moranlaw.co/about) - [Careers](https://moranlaw.co/careers) - [Blog](https://moranlaw.co/blog) [Contact us](https://moranlaw.co/contact) - Our Services - [Intellectual Property](https://moranlaw.co/protecting-intellectual-property) - [Commercial and Corporate](https://moranlaw.co/commercial-and-corporate) - [For Families](https://moranlaw.co/for-families) - [Elevated Trust Management](https://moranlaw.co/elevated-trust-management) - [Not-For-Profit](https://moranlaw.co/not-for-profits) - [Privacy, Cyber and Data Security](https://moranlaw.co/privacy-cyber-and-data-security) - [Our Team](https://moranlaw.co/moranlaw-team) - [About Us](https://moranlaw.co/about) - [Careers](https://moranlaw.co/careers) - [Blog](https://moranlaw.co/blog) ##### WELLINGTON, NEW ZEALAND Level 1, 40 Lady Elizabeth Lane Wellington 6011 Postal: PO Box 10538 Wellington 6140 Phone: +64 4 830 2430 Email: [team@moranlaw.co](mailto:team@moranlaw.co) ##### AUCKLAND, NEW ZEALAND Suite 502, Level 5, Achilles House 8 Commerce Street Auckland 1010 Phone: +64 9 951 1468 ##### SYDNEY, AUSTRALIA Level 26, 44 Market Street  Sydney, NSW, 2000 Phone: +61 2 9091 4258 ![](https://moranlaw.co/hs-fs/hubfs/AI-Generated%20Media/Images/Shareholders%20Agreement%20With%20Softer%20Lines.png?width=1280&name=Shareholders%20Agreement%20With%20Softer%20Lines.png) # Do you need a shareholders' agreement? Start with these 5 questions ![Fergielyn Catayoc](https://moranlaw.co/hs-fs/hubfs/New%20team%20member%20social%20photo%20(1)-4.png?width=80&name=New%20team%20member%20social%20photo%20(1)-4.png) [Fergielyn Catayoc](https://moranlaw.co/blog/author/fergielyn-catayoc) November 13, 2026, 2:05:53 PM NZDT Shareholders' agreements aren't there for when everyone agrees. They're there for when they don't. When people start a business together, optimism is usually in good supply. The founders are aligned, the vision is clear, and everyone is focused on growth. That is often exactly why a shareholders' agreement gets pushed down the priority list. The problem is that shareholders' agreements are not there for when everyone agrees. They're there for when they don't. A shareholders' agreement is a document that sets out the rules between the owners of a company. It outlines how key decisions will be made, what happens if someone wants to leave, how shares can be transferred, and how disputes will be handled. It provides a framework for dealing with situations that are difficult to predict but almost inevitable over the life of a business. Without one, business owners can find themselves relying on the default rules in the Companies Act 1993. Those rules may not reflect what the shareholders intended. When circumstances change or disagreements arise, the absence of a clear agreement can lead to uncertainty, strained relationships, costly disputes, and disruption to the business itself. Some business owners assume their company's constitution already covers these issues. A constitution can deal with some of them, but it is a public document filed with the Companies Office and is often in a standard form. A shareholders' agreement is private, can be tailored to your business, and can cover matters a constitution often does not. The two documents work best together. If you're unsure about any of the following, it may be time to put a shareholders' agreement in place. 1\. What happens if we can’t agree on an important decision? At some point, every business faces decisions that carry risk. *Do we take on debt? Expand? Bring in an investor? Sell part of the business?* One shareholder says yes. The other says no.When shareholders have different views, decision-making can quickly grind to a halt, particularly where ownership is split evenly. Without a shareholders' agreement, there may be no clear process for resolving a deadlock. That can leave the business stuck while opportunities pass by and relationships become strained. Clear decision-making rules and deadlock mechanisms can help prevent disagreements from becoming business-threatening problems. 2\. What happens if one of us wants to leave?  It happens more often than people think. Businesses change, and people do too. A founder may want to retire, move on to a new venture, or step away for personal reasons. Sometimes unexpected events, such as illness, can change plans overnight. Without a shareholders' agreement, there may be no clear roadmap for what happens next. For example, a founder who wants to retire may expect the remaining shareholders to buy their shares. The remaining shareholders may not have the funds available, or they may disagree on what the shares are worth. If there is no agreed valuation process, negotiations can become difficult very quickly. Without a shareholders' agreement, the Companies Act does not provide a detailed roadmap for handling a shareholder exit. Shareholders are often left trying to negotiate a solution after the issue has already arisen. Having those answers agreed in advance can make what is often a challenging transition much smoother for everyone involved. 3\. Can my business partner sell their shares to someone I don't know? Many business owners assume they will always know who they're in business with. That's not always the case. Without appropriate restrictions, a shareholder may be able to sell their shares to someone the other owners would never have chosen to do business with. In some circumstances, shares may also pass to family members or an estate following a shareholder's death. This is one area where the default position often surprises business owners. Shares are generally transferable unless restrictions are included in a constitution or shareholders' agreement. The Companies Act does not automatically give shareholders a right of first refusal on share transfers. For many business owners, the prospect of suddenly having a new co-owner they did not choose can be a significant risk. A shareholders' agreement can include transfer restrictions, approval requirements, and rights of first refusal, giving existing shareholders greater control over who becomes involved in the business. 4\. What happens if we end up in a dispute? Disputes in business are not unusual. What matters is how they are managed. Without an agreed dispute resolution process, shareholders may be left with negotiation or court proceedings. While the Companies Act provides remedies in some circumstances, including where conduct is oppressive, unfairly discriminatory, or unfairly prejudicial, litigation is rarely anyone's preferred outcome. The longer a dispute continues, the greater its impact on the business, its employees, and its customers. A shareholders' agreement can include practical dispute resolution mechanisms, such as mediation or structured negotiation processes, helping shareholders resolve issues before they escalate and threaten the business. 5\. What if one of us stops pulling their weight? When a business starts, everyone is usually all in. Over time, that can change. One shareholder is working long hours. The other has stepped back. Both still own the same share of the business. This is one of the most common sources of friction between business owners, and one of the least talked about. It often builds quietly until resentment turns into conflict. This is amplified when salaries are fixed or unable to be changed without wider shareholder agreement that is not forthcoming. Many business owners assume that if someone stops contributing, they lose their stake. That's not the case. Being a shareholder and working in the business are two different things. A shareholder who stops turning up generally keeps their shares, along with their right to share in dividends and the value of the business. The Companies Act does not require them to sell. A shareholders' agreement can set clear expectations from the start: who is responsible for what, how much time each person commits, and what happens if those commitments aren't met. It can also include “leaver” provisions, which require a shareholder who stops working in the business to sell their shares, often on agreed valuation terms. Agreeing on these expectations early is far easier than trying to have that conversation once frustration has already set in. The cost of doing nothing A shareholders' agreement is ultimately about continuity. It provides a framework for dealing with events that almost every business will face at some point: changing priorities, ownership changes, disagreements, exits, and unexpected life events. These situations are not signs that a business has failed. They are simply part of running a business in the real world. The cost of preparing a shareholders' agreement is often modest compared to the cost of dealing with a dispute, deadlock, or shareholder exit without one. By putting clear rules in place early, business owners can reduce uncertainty, protect relationships, and give their business a stronger foundation for the future. Because the real value of a shareholders' agreement is not when everyone is on the same page. It's knowing what happens when they're not. About the author: [Fergielyn](https://moranlaw.co/fergielyn-catayoc-moranlaw?hsLang=en-nz) is a corporate and commercial lawyer, NMAS Accredited Mediator and Professional Member of the Resolution Institute. She brings a practical and solutions-focused approach to her work, with experience spanning dispute resolution, intellectual property and technology. She is also the co-founder of The Curious Society, a community lecture series bringing together experts and curious minds to explore ideas across business, culture and society. Share on: [Share on Facebook](https://www.facebook.com/sharer.php?u=https://moranlaw.co/blog/do-you-need-a-shareholders-agreement-start-with-these-5-questions) [Share on LinkedIn](https://www.linkedin.com/shareArticle?mini=true&url=https://moranlaw.co/blog/do-you-need-a-shareholders-agreement-start-with-these-5-questions) Tags: [Corporate and Commercial](https://moranlaw.co/blog/tag/corporate-and-commercial) You may also like ![](https://moranlaw.co/hs-fs/hubfs/AI-Generated%20Media/Images/A%20series%20of%20buildings%20and%20sky%20scrapers%20in%20a%20navy%20blue%20against%20a%20pale%20blue%20background-1.jpeg?width=630&name=A%20series%20of%20buildings%20and%20sky%20scrapers%20in%20a%20navy%20blue%20against%20a%20pale%20blue%20background-1.jpeg) May 5, 2025, 3:27:18 PM NZST Should my Company Have a Constitution? ![](https://moranlaw.co/hs-fs/hubfs/around-table.jpg?width=630&name=around-table.jpg) November 28, 2024, 1:15:43 PM NZDT Inspection of your Company’s Register by the Companies Office – are you Prepared? ![](https://moranlaw.co/hs-fs/hubfs/AI-Generated%20Media/Images/Moranlaw%20Scales%20And%20Coins%20Split%20Screen.png?width=630&name=Moranlaw%20Scales%20And%20Coins%20Split%20Screen.png) November 11, 2026, 10:34:11 AM NZDT The differences between debt and equity funding and when each may be appropriate ### SPECIALIST AREAS [Intellectual Property](https://moranlaw.co/protecting-intellectual-property) [Commercial and Corporate Law](https://moranlaw.co/commercial-and-corporate) [For Families](https://moranlaw.co/elevated-trust-management) [Elevated Trust Management](https://moranlaw.co/for-families) [Not-For-Profits](https://moranlaw.co/not-for-profits) [Privacy, Cyber, and Data Security](https://moranlaw.co/privacy-cyber-and-data-security) ### The Team - [Scott Moran](https://moranlaw.co/scott-moran-moranlaw) - [Kerina Kinajil](https://moranlaw.co/kerina-kinajil-moranlaw) - [Amanda Griffiths](https://moranlaw.co/amanda-griffiths-moranlaw) - [Louisa Joblin](https://moranlaw.co/louisa-joblin-moranlaw) - [Jessie Malcolm](https://moranlaw.co/jessie-malcolm-moranlaw) - [Ffion Merchant-Williams](https://moranlaw.co/ffion-merchant-williams-moranlaw) - [John Hackett](https://moranlaw.co/john-hackett-moranlaw) - [Chelcie Kite](https://moranlaw.co/chelcie-kite-moranlaw) - [Venetia McInman](https://moranlaw.co/venetia-mcinman-moranlaw) - [Fergielyn Catayoc](https://moranlaw.co/fergielyn-catayoc-moranlaw) - [Lucas d’Arbois de Jubainville](https://moranlaw.co/lucas-darbois-de-jubainville-moranlaw) - [Kimberley Will](https://moranlaw.co/kimberley-will-moranlaw) - [Shamara Polliack](https://moranlaw.co/shamara-polliack-moranlaw) - [Tracey Lucas](https://moranlaw.co/tracey-lucas-moranlaw) - [Kathy Hunter](https://moranlaw.co/kathy-hunter-moranlaw) - [Sara Barnes](https://moranlaw.co/sara-barnes-moranlaw) - [Rebecca Evans](https://moranlaw.co/rebecca-evans-moranlaw) - [Flora Dryburgh](https://moranlaw.co/flora-dryburgh-moranlaw) - [Jacky Simperingham](https://moranlaw.co/jacky-simperingham-moranlaw) - [Tom Winfield](https://moranlaw.co/tom-winfield-moranlaw) ### Quick Links - [Contact Us](https://moranlaw.co/contact) - [About Us](https://moranlaw.co/about) - [Careers](https://moranlaw.co/careers) - [Privacy Policy](https://moranlaw.co/privacy-policy) - [Terms](https://moranlaw.co/terms-of-engagement) - [Our Blog](https://moranlaw.co/blog) © MoranLaw Limited 2024 [LinkedIn](https://www.linkedin.com/company/moranlaw) [Instagram](https://www.instagram.com/moranlawnzau/) [Facebook](https://www.facebook.com/profile.php?id=61557642282289) ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Fergielyn Catayoc", "url" : "https://moranlaw.co/blog/author/fergielyn-catayoc" }, "dateModified" : "2026-11-13T01:06:36.632Z", "datePublished" : "2026-11-13T01:05:53.000Z", "headline" : "Do you need a shareholders' agreement? 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