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- Proposed Superannuation Guarantee Amnesty – Have you correctly paid your staff super?
- CBA has increased its 4-year Fixed Rate – Is now the time to fix your loan
- ATO is Auditing Rental Property Expense Claims
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- How a Mortgage can improve your Financial Position / How a Mortgage can grow your Wealth
- 5 Everyday Examples of IPA in Practice
- Is Your SMSF Investment Strategy Compliant?
- Buy your own Premises NOW – Business Loans at 2.45% per annum
- Business Intelligence (BI) in Small Business
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- Limitations to the Superannuation Death Benefit
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- Managing your Money through this Crisis!
- Be ready before refinancing or applying for a new loan
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- NOW is the time to re-look at your SMSF loan’s interest rate
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- Buying Property through your SMSF
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- Small Business – Fees & Charges Rebate – Up to $1500
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- Australian Taxes Payable as a Foreign Resident
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- Superannuation Increases – Trust Members + Contribution Caps + Guarantee Contribution Base + Pension Caps – from 1 July 2021
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- SMSF Withdrawal and Re-Contribution Strategy: Tax Benefits
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- Important tools for your business: Cash Flow and Budgeting
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- Check your Single Touch Payroll (STP) software system – Is it fully ‘Phase 2’ compliant?
- Transferring asset ownership to a SMSF is an in specie contribution
- Watch Out! You may be liable for a maximum criminal penalty of $13,200 if you have not acquired your Director ID Number by now.
- SMEs’ Obligation under Australia’s Renewable Energy Target (RET) Scheme
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- End-of-Year Festive Season – Claims and Tax Exemptions
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- Long-term Value Investing – How it is suited to SMSFs
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- Take Advantage: Capital Gains Tax (CGT) Concessions for Small Businesses
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- You may access your Superannuation Benefits… When?
- Superannuation Guarantee Rate – Change from 1 July 2023
- NEW Register of Foreign Ownership – Do you need to notify it?
- A General Guide to Property Transfers and ATO Clearances
- What can you do if you do not agree with a Notice of Valuation of your land?
- Watch Out! You may be liable for a maximum criminal penalty of $16,500 if you have not acquired your Director ID Number.
- Australian Taxation Agents require Clients to provide Photo ID
- What are your SMSF Tax-deductible Expenses?
- How to remove a Property Caveat in NSW
- Is Co-Sourcing the Solution to help your Business thrive?
- Who is a Related Party in your SMSF and why should you know?
- Bring Forward Rule to top up your Superannuation
- Next 5000 - Private Tax Group - Tax Performance Program
- Land Tax Change – Provisional Primary Residence Exemption
- Landholder Duty – Changes to the Ownership Percentage Threshold
- Navigating the Waters of Tax Audits: The Benefits of Tax Audit Insurance for Taxpayers
- NEW Stage 3 Income Tax Cuts from 1 July 2024
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- What is your EOFY accounting strategy? How will you finance your EOFY business asset acquisitions?
- Outsourcing and Co-sourcing to increase Productivity in a shifting Economy
- Restructure Relief Options – Small Business Restructure Rollover
- Virtual Bookkeeping Services for streamlining your Business
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- WORK RELATED CAR EXPENSES - WHAT'S LEGAL?
- WHAT IS THE BEST WAY TO PAY OFF YOUR DEBTS?
- New Withholding for Non Residents
- Business Protection Insurance
- Aiming to Make a Final Non Concessional Superannuation Contribution for 2016? Be Careful!
- Getting Organized and Planning Effectively This EOFY
- Four Per Cent Stamp Duty Surcharge for Overseas Investors Buying Residential Real Estate in NSW
- Co-Sourcing: An Alternative To Out-Sourcing
- What Small Business Expenses Can You Claim?
- Israeli Tax of Trusts
- New Superannuation Rules
- YML Group App - Coming Soon
- Obtaining a Business Skills Visa
- Quick Tips to Pay Off Your Mortgage Sooner
- FBT on Christmas Gifts and Tax Deductibility of Christmas Parties
- Changes to the Assets Test for Centrelink Aged Pensions from January 1st 2017
- Why You Should Consider Co-Sourcing for your Business
- Is It Worth Fixing Your Loan?
- Co- Sourcing
- RPA
- Shareholder's Agreements
- FAMILY TRUST DEED VARIATION
- ENCOURAGING NEWS FOR Permanent residency (pr) APPLICANTS
- Tax
Shareholder’s Agreements
If you are knee-deep in founding a start-up, onboarding new investors, or looking to protect the company you have built, a shareholder’s agreement may be required. These agreements can be crucial to protecting operational integrity, and should be thoroughly drafted and reviewed by a legal advisor.
What is a shareholder’s agreement?
There are a couple of situations where a shareholder agreement may be a legally advantageous document to have on hand for operational decisions. This document sets out key parameters for business operations, including executive or director level behaviour, voting rights, and other financial concerns involved in a partnership of any sort.
There are two main situations where a shareholder agreement would be drawn up:
1. Company ownership b shareholders (partnership)
In this scenario, a number of shareholders who work within the company may wish to have management or decision (board) rights. This agreement will define how the company will run, and how key decisions will be made (e.g. company sale, or executive appointments).
2. Company investment (capital rasing, or passive investment)
In this scenario, an existing company may raise additional required capital by inviting investors willing to play a largely passive role in the company (i.e. provision of capital, minimal decision rights, etc.) An agreement will define how the company should continue to run, and any changes that may occur due to the new investor.
A shareholder agreement would also be used where two companies form a joint venture which will conduct operations through a third, jointly owned company.
strong>Do I need one?
A shareholder’s agreement can be a useful legal tool in many circumstances, and allows all interested parties to be fully aware of how many business and operational decisions will be made in a range of situations, ahead of the potential situation. CPA Australia explains that “while the Corporations Act does not require companies to have a Shareholders Agreement, having one can be beneficial for setting ground rules about issues that affect shareholders, such as one shareholder deciding to sell their share later, where the conditions for doing so, have already been worked out in a signed Shareholder Agreement.” (CPA Australia)
If you’re unsure whether or not a shareholder’s agreement would be of benefit to your company, a financial and legal advisor can provide valuable insight into making this decision.
What is covered in an agreement?
The topics and decisions covered in a shareholder’s agreement can vary, as this document can be tailored to the purpose and needs of the individual business; in addition to this, there may be industry-specific situations requiring attention.
However, there are a number of key items that would traditionally be covered in a shareholder agreement. Some of these are:
- Appointment or termination of executive-level employees
- Decisions requiring a unanimous vote
- Delegations and their use
- Shareholder meeting frequency
- Director’s key performance indicators
- Dispute resolution
- Sale or liquidation of the company
High-level, high stakes decisions around items such as those listed above can play a crucial role in the success or failure of a new company; this is why a detailed and methodical shareholder’s agreement can be invaluable in times of operational stress.
How can YML help?
Talk to our legal department today to see how YML Group can assist you with your shareholder’s agreement. Contact us on (02) 8383 4400 or by visiting the Contact Us Page