Minority Shareholder Agreement

The marginalisation of one shareholder or group of shareholders is called ‘shareholder oppression’. The shareholder oppression claims heard in Australian courts are in situations where a minority shareholder (or shareholders) are being unfairly treated by a larger (and usually a majority) shareholder.

The oppressive conduct provisions of the Corporations Act are commonly used in conjunction with a claim of breach of director’s duty or in bringing an application to wind up the company entirely. Situations in which shareholder oppression occurs may be avoided by using a minority shareholder agreement, particularly in situations where the minority shareholders are making a significant financial contribution to the company.

Minority Shareholder Agreement (with Commentary)

This Minority Shareholder Agreement is designed to protect the interests of minority shareholders within a private company. It defines voting rights, director appointments, profit distribution, and transfer options while ensuring that minority investors retain influence over key company decisions.

The precedent is accompanied by detailed commentary explaining the legal framework surrounding shareholder oppression under the Corporations Act 2001 (Cth), including available remedies, legislative protections, and guidance on fair commercial conduct     

What This Agreement Covers

• Appointment and removal of nominee directors by minority shareholders
• Limits on company actions without minority approval
• Working capital commitments from majority shareholders
• Dividend distribution and minimum profit requirements
• Put option giving minority shareholders a right to sell shares after a fixed period
• Valuation mechanism for fair sale price determination
• Consent requirements and pre-emptive rights on share transfers
• Remedies for breach, including compulsory purchase provisions
• Warranties, variation, waiver, and general legal clauses