What are the Key Responsibilities of a Shareholders Agreement Lawyer?

A shareholders’ agreement lawyer in South Africa is responsible for drafting a binding private contract between shareholders that governs share transfers, dividend policy, decision-making, dispute resolution, and exit mechanisms, while ensuring the agreement is consistent with the Companies Act 71 of 2008 and the company’s Memorandum of Incorporation. Their core responsibilities cover advising on the appropriate legal structure, drafting and negotiating the agreement, reviewing or amending existing agreements when circumstances change, ensuring the agreement does not conflict with the MOI (any inconsistency is resolved in favour of the MOI), and assisting with enforcement or dispute resolution where shareholders fall out. South African shareholders’ agreement lawyers also advise on Companies and Intellectual Property Commission (CIPC) filing implications, the interaction between the shareholders’ agreement and any related founder, employment, or loan agreements, and the tax treatment of dividends, share transfers, and any put or call options built into the document.

What a Shareholders’ Agreement Is and Why It Matters in South Africa

A shareholders’ agreement is a private contract between the shareholders of a company that governs their relationship, the management of the company, and the ownership and transfer of shares. It sits alongside — and must not contradict — the company’s Memorandum of Incorporation (MOI), which is the constitutional document filed with the Companies and Intellectual Property Commission (CIPC) under the Companies Act 71 of 2008.

These agreements are common in South Africa for:

• Private companies and close corporations with more than one shareholder;
• Joint ventures where parties want the operating rules fixed before work begins;
• Family businesses with both family and non-family shareholders, or where generation change is anticipated;
• Start-ups and growth-stage companies bringing in co-founders, minority investors, or employee shareholders who need specific protection.

The agreement is particularly important where there are minority shareholders who need protection, or where multiple founders want to lock in decision-making rules — pre-emption rights, dividend policy, deadlock mechanisms, and exit triggers — before operations begin. Without one, the default rules in the Companies Act and the company’s MOI will apply, which rarely reflect what the parties privately agreed at the kitchen table.

MOI vs Shareholders’ Agreement — Why Both Exist

The MOI and the shareholders’ agreement perform different jobs and are drafted as a pair. If they conflict, the MOI wins. The lawyer’s job is to make sure the two documents do not undermine each other.

Aspect	Memorandum of Incorporation (MOI)	Shareholders’ Agreement
Filed with CIPC?	Yes — public document	No — private contract
Who it binds	The company, all shareholders, and all directors	Only the shareholders who are parties to it
What it covers	Constitutional rules of the company	Operational rules between shareholders (transfers, deadlock, dividends, exits)
Can it override the Companies Act?	No — invalid to the extent it does	No — invalid to the extent it does
Consistency rule	If the shareholders’ agreement conflicts with the MOI, the MOI prevails	Same — the agreement cannot override the MOI

The two documents must be drafted together, or one will quietly undermine the other. A shareholders’ agreement lawyer reviews both side by side and advises which clauses belong in each instrument.

The Lawyer’s Key Responsibilities: Drafting

The drafting phase begins with identifying the parties, the company, and the share-class structure before any clauses are written. The lawyer then drafts tailored provisions covering the operational rules the parties care about:

• Share transfer mechanics — pre-emption rights (existing shareholders offered shares first), drag-along (forcing minority to sell on a sale of control), tag-along (allowing minority to join a sale of control).
• Board composition and director appointment or removal.
• Dividend policy — when distributions are made, how they are split, and any reserved powers over the timing.
• Reserved matters — decisions requiring a special majority, such as changes to the business, further share issuances, or major borrowings.
• Deadlock mechanisms — independent chair casting vote, deadlock-breaking expert, or a regulated put/call window.
• Exit events — death, disability, insolvency, retirement, or a shareholder ceasing to be employed by the company.

Every clause is checked against the MOI and the Companies Act; any inconsistency is resolved in favour of the MOI. The lawyer also adds a dispute-resolution clause — mediation, arbitration, or expedited adjudication — so shareholders resolve disputes without immediately resorting to court.

The Lawyer’s Key Responsibilities: Advising

Advising is not drafting. It involves telling the client which instrument fits the situation, and which clauses to push back on.

• Advising on whether a shareholders’ agreement is the right instrument versus a unanimous shareholders’ resolution, an amended MOI, or a separate subscription or founders’ agreement.
• Advising minority shareholders on anti-dilution, exit, and information rights.
• Advising majority shareholders on how to structure decision-making without breaching the oppression-and-fairness remedies in section 163 of the Companies Act.
• Advising on the tax treatment of dividends, share transfers, and any put/call options under the agreement.
• Flagging clauses that may be unenforceable under the Act — for example, provisions that purport to override statutory shareholder rights or remove the protections in section 163.

Burger Huyser Attorneys’ Commercial Law and Contracts practice, led by specialist consultant J’Retha van Rensburg, advises both majority and minority shareholders on these questions from the Linden head office in Randburg, with regional intake available through the Pretoria, Centurion, and Midrand branches.

The Lawyer’s Key Responsibilities: Negotiating and Reviewing

Most drafting work is in fact negotiation. The lawyer translates each side’s commercial position into enforceable clauses and brokers compromises on reserved matters, deadlock triggers, and valuation mechanics.

Common negotiation dynamics include founders versus investors, majority versus minority, and family versus non-family shareholders. The lawyer’s role is to keep the negotiation moving while protecting the client’s legally enforceable position.

Reviewing an existing agreement is a separate, recurring responsibility:

• When a new shareholder joins and existing parties need to amend or sign a deed of accession;
• When a share transfer is contemplated and pre-emption or tag-along rights need to be worked through;
• When the company is being restructured, sold, or raising a new funding round;
• When the existing agreement is being reviewed alongside related documents — founder agreements, loan agreements, employment contracts with share incentives, and the MOI — to ensure consistency across the full set of governing instruments.

The Lawyer’s Key Responsibilities: Dispute Resolution and Enforcement

When a shareholders’ agreement is breached — for example, shares are transferred in breach of pre-emption rights, a party acts outside the reserved matters, or a deadlock-breaking mechanism is refused — the lawyer advises on the available remedies and represents the client in negotiations, mediations, or court proceedings.

Two specific situations come up often:

• Buy-out mechanisms. Many agreements include a triggered buy-out on deadlock, disability, or insolvency of a shareholder. The lawyer helps run the valuation and timing mechanics — which often require an independent valuer and a defined window for completion.
• The section 163 oppression remedy. Where the shareholders’ agreement is silent on a particular dispute, the statutory remedy under section 163 of the Companies Act may be more appropriate than a contractual claim. The lawyer advises which route to take and which forum (High Court or arbitration, depending on the dispute-resolution clause) is the correct one.

Burger Huyser Attorneys coordinates this work with its general litigation practice where shareholder disputes escalate to formal proceedings.

How a Shareholders’ Agreement Lawyer Works with Other Professionals

A shareholders’ agreement does not sit alone. The lawyer coordinates with:

• The company’s auditor on the dividend and valuation mechanics referenced in the agreement;
• The client’s tax advisor on the implications of any put/call or share-buyback provisions;
• The company’s accounting and compliance team on CIPC filings where share transfers trigger lodgement.

This coordination matters: a clause that looks fine on paper can be commercially unworkable if the valuation mechanic or CIPC filing flow has not been tested against the company’s actual records.

When to Engage a Shareholders’ Agreement Lawyer

The right time to bring a shareholders’ agreement lawyer in is:

1. Before the company is incorporated, or as soon as there is more than one shareholder.
2. When a new investor or shareholder is being brought in.
3. When there is a dispute or risk of deadlock among existing shareholders.
4. When the existing agreement is being reviewed ahead of a major transaction — sale, restructure, or new funding round.

The earlier the lawyer is brought in, the cheaper and cleaner the document usually is. Wait until a dispute has crystallised and the cost of fixing the agreement is typically several times higher than the cost of drafting it properly the first time.

Need a shareholders’ agreement drafted or reviewed? Burger Huyser Attorneys’ Commercial Law and Contracts practice, led by specialist consultant J’Retha van Rensburg, handles shareholders’ agreements across Gauteng. Contact the Linden head office on 011 888 0246, the Pretoria branch on 012 471 5700, Centurion on 012 644 4990, or Midrand on 010 022 4082 to book an initial consultation. Bring your existing shareholders’ agreement (if any), the company’s Memorandum of Incorporation, and any related founder, employment, or loan documents so the lawyer can review the full picture in one sitting. The firm carries a 4.8/5 average across 250+ Google reviews (Trustindex verified “Top Rated Law Firm in South Africa”) and was named Commercial Law Firm of the Year 2025 by the 5 Star Lawyers Awards.

Frequently Asked Questions

Do I need a lawyer to draft a shareholders’ agreement in South Africa?

A lawyer is not legally required to draft a shareholders’ agreement, but the document is a binding private contract that interacts with the Companies Act 71 of 2008 and the company’s Memorandum of Incorporation. A shareholders’ agreement lawyer ensures the agreement is enforceable, consistent with the MOI, and covers the specific scenarios the parties care about — pre-emption rights, deadlock, dividend policy, and exit events — without falling foul of statutory remedies such as section 163.

What is the difference between a shareholders’ agreement and a Memorandum of Incorporation?

The Memorandum of Incorporation (MOI) is the company’s constitutional document filed with CIPC and binds the company, all shareholders, and all directors; the shareholders’ agreement is a private contract between shareholders that governs their relationship and cannot override the MOI. A shareholders’ agreement lawyer drafts both to be consistent and advises which clauses belong in which document.

Can a shareholders’ agreement override the Companies Act?

No. A shareholders’ agreement cannot override the Companies Act 71 of 2008 or the company’s MOI. Any clause that conflicts with the Act is unenforceable. A shareholders’ agreement lawyer reviews the agreement to ensure it does not unintentionally contract out of statutory shareholder rights.

How long does it take to draft a shareholders’ agreement?

A straightforward agreement between two founders of a new company typically takes two to four weeks from instruction to signed document, depending on how quickly the parties negotiate reserved matters and exit events. Multi-party or investor-grade agreements (multiple share classes, drag/tag, family trusts, or institutional investors) take longer.

How much does a shareholders’ agreement lawyer cost in South Africa?

Fees depend on the complexity of the agreement and the number of parties. A simple two-party founder agreement is typically charged at a flat fee; multi-party or investor-grade agreements are usually quoted on an hourly or staged basis after the initial scoping. Burger Huyser Attorneys quotes on a per-matter basis after the initial consultation.