What Is the Difference Between MOI and Shareholders Agreement?

A Memorandum of Incorporation (MOI) is the company’s constitutional document filed with CIPC under the Companies Act 71 of 2008 and binds the company, every shareholder and every director on a public basis. A shareholders’ agreement (SHA) is a private contract between some or all of the shareholders that governs how those shareholders relate to each other and, sometimes, to the company. The two are not interchangeable: the MOI sets the public governance rules the company must follow, while the SHA layers additional private arrangements on top. Where the two conflict, section 15(7) of the Companies Act provides that the MOI prevails.

A Memorandum of Incorporation (MOI) is the company’s constitutional document filed with CIPC under the Companies Act 71 of 2008. A shareholders’ agreement (SHA) is a private contract between some or all of the shareholders. The MOI sets the public governance rules; the SHA layers additional private arrangements on top. Where the two conflict, section 15(7) of the Companies Act provides that the MOI prevails.

What an MOI Is (and Where It Gets Its Authority)

The MOI is the company’s constitutional document under section 15 of the Companies Act 71 of 2008. It is filed with CIPC and is publicly accessible, and its authority is statutory rather than contractual.

Section 15(1) extends the MOI’s binding effect to the company, its shareholders and its directors regardless of whether they signed it — an incoming shareholder who buys a single share on the secondary market is automatically bound by the MOI in force at the time of acquisition. The MOI is, in that sense, the rulebook every person dealing with the company as a shareholder or director is taken to have accepted.

The MOI is the public face of the company’s governance. It covers share classes and the rights attaching to each, voting rights and the thresholds for ordinary and special resolutions, how directors are appointed and removed, board size and composition, matters reserved for shareholder special resolution, and the procedure for issuing new shares. An MOI is amended only by special resolution — typically 75% of voting rights — and the amendment is filed with CIPC, so any change becomes part of the public record.

Multi-shareholder companies regularly look to the firm’s Commercial Law practice (led by consultant J’Retha van Rensburg and admitted attorney Mari Köhne) for MOI drafting and review when the shareholding or governance changes.

What a Shareholders’ Agreement Is (and Where It Gets Its Authority)

A shareholders’ agreement is a private contract between (typically) all or most of the shareholders, sometimes joined by the company itself. Its authority is the common law of contract, not the Companies Act and not the MOI. That smaller canvas — only the parties who signed it are bound — is what makes it useful for matters the MOI should not or cannot carry.

An SHA is not filed with CIPC and is not publicly searchable. Only the parties who signed it are bound by it; an incoming shareholder who never signed the SHA is not, on that basis alone, subject to its terms.

The SHA is the right home for matters private to the shareholders — drag-along and tag-along mechanics (price, notice, threshold), pre-emption rights and the right-of-first-refusal procedure for internal transfers, deadlock procedures when directors cannot agree, founder vesting schedules and leaver provisions, restraint of trade and non-compete obligations binding the shareholders personally, and what happens to shares on death, divorce or insolvency. Because the SHA is a contract, it is amended only by agreement of the parties, in line with the variation clause; the amendment is not filed anywhere and does not bind any person who is not a signatory.

Burger Huyser Attorneys’ Commercial Law team routinely drafts and reviews SHAs alongside the MOI for new companies, founder arrangements and shareholder restructurings.

Side-by-Side: Where the Two Documents Differ

The table below sets out the principal differences at a glance. The contrast drives what each document is suitable for and what happens when the two conflict.

Dimension	MOI	Shareholders’ Agreement
Source of authority	Companies Act 71 of 2008, section 15	Common law contract
Filed with CIPC?	Yes — public	No — private
Who it binds	Company, all shareholders, all directors, certain third parties	Only the parties who signed it
Amendment	Special resolution (typically 75%); filed at CIPC	By agreement of the parties, per the contract’s variation clause
Typical content	Share classes, voting rights, board structure, reserved matters, director appointment	Drag/tag, pre-emption, deadlock, vesting, restraint, exit mechanics, shareholder protocols
Conflict with the other	Wins under section 15(7)	Loses to the MOI where in conflict, but supplements where it does not conflict
Public visibility	High — anyone can pull it from CIPC	Confidential — only the parties and their advisors see it

What Goes in the MOI vs What Goes in the SHA (Practical Rules)

The drafting rule is straightforward: anything that binds the company itself, its directors, or incoming shareholders without their signature should live in the MOI; anything that governs only the shareholder-to-shareholder relationship and can stay private should live in the SHA.

The MOI is the correct home for share class rights, voting rights and the issue of new shares; the board’s structure, size and appointment mechanics; quorum requirements; dividend policy; and reserved matters requiring a special resolution. The SHA is the correct home for drag-along and tag-along rights, pre-emption rights and right-of-first-refusal procedures, founder vesting schedules and leaver provisions, restraint of trade and non-compete obligations, and what happens to shares on a shareholder’s death, divorce or insolvency.

A common drafting error is putting contractual matters into the MOI — for example, a restraint clause drafted in personal terms. That can be ineffective against non-signatories or struck out on public-policy grounds because the MOI binds a wider audience than a private contract. The reverse error leaves the company unable to enforce the rule against incoming shareholders or directors who never signed.

The Section 15(7) Rule: When the Two Conflict

Section 15(7) of the Companies Act 71 of 2008 provides that any provision in a shareholders’ agreement that is inconsistent with the company’s MOI is void to the extent of the inconsistency. In other words, where the MOI and the SHA conflict, the MOI wins.

The practical consequence is that an SHA clause that purports to override a voting threshold, board composition rule, quorum requirement, dividend policy or reserved-matters list set in the MOI will fail at the point of enforcement. The MOI governs, and the SHA clause is ineffective to the extent of the conflict. The SHA is not dead, however: it remains effective where it supplements the MOI without conflicting, and the contractual remedies between signatories (damages, specific performance, interim interdicts) remain available. A well-drafted SHA uses “notwithstanding the MOI, the parties agree…” language only for strictly shareholder-internal matters, and otherwise defers to the MOI.

Clauses That Commonly Sit in Both Documents

A few clauses routinely appear in both documents. The MOI does the constitutional work so the rule binds incoming shareholders and directors; the SHA does the private, relationship-level work so the mechanics stay confidential.

• Drag-along / tag-along. The constitutional right can be set in the MOI so it binds incoming shareholders, with the private mechanics (price, notice, threshold) in the SHA.
• Pre-emption rights on new share issues. A public-facing rule in the MOI plus a private right-of-first-refusal procedure in the SHA.
• Reserved matters. Most appropriately in the MOI (so they bind future directors), but the SHA can require unanimous shareholder consent as an additional contractual layer.
• Board composition. Almost always in the MOI; the SHA usually cross-refers rather than reproduces the rule.
• Dividend policy. Typically in the MOI; the SHA may add a shareholder-level protocol for declaration timing.

How to Use the Two Together (Drafting Workflow)

The drafting workflow that avoids most section 15(7) problems starts with the MOI and layers the SHA on top:

1. Start with the MOI. It is the upstream instrument; the SHA can never override it.
2. Draft the SHA to mirror the MOI’s structure, adding the layers the MOI doesn’t need to or shouldn’t carry.
3. Cross-reference between the two — the SHA can recite that nothing in the agreement overrides the MOI, then list the supplementary rights it adds.
4. Build a deed-of-accession mechanism. Any incoming shareholder signs the SHA as a condition of any transfer.
5. Review both documents together when the shareholding changes, a director is added or removed, or the Companies Act is materially amended.

Frequently Asked Questions

Does a shareholders’ agreement override an MOI?

No. Under section 15(7) of the Companies Act 71 of 2008, if a shareholders’ agreement conflicts with the MOI, the MOI prevails. The agreement remains enforceable between its signatories to the extent it does not conflict with the MOI.

Can a shareholders’ agreement bind the company itself?

Sometimes. If the company is a signatory, the company is bound. If not, the agreement binds only the shareholders among themselves.

Do I need both an MOI and a shareholders’ agreement?

A company must have an MOI — the Companies Act requires it. A shareholders’ agreement is optional, but most multi-shareholder companies benefit from one because it addresses the private contractual layer (drag/tag, pre-emption, deadlock, vesting, restraint) that the MOI cannot carry effectively.

Are MOI and shareholders’ agreement public?

The MOI is filed with CIPC and is publicly searchable. A shareholders’ agreement is a private contract and is not filed anywhere — it is confidential to the parties and their advisors.

Can a shareholders’ agreement be terminated, and what happens to the shareholders then?

Yes. A shareholders’ agreement typically has a termination clause (sometimes triggered by an exit, an IPO, or a change of control of more than half the shares). When the agreement ends, the shareholders fall back on the MOI and the Companies Act for governance.

What happens if an incoming shareholder is not added to the shareholders’ agreement?

They are bound by the MOI but not by the shareholders’ agreement. Existing pre-emption, drag/tag and deadlock arrangements will not work against the new shareholder unless the agreement is updated or the new shareholder signs a deed of accession.

If you are setting up a new company, reviewing an existing shareholders’ agreement, or working out whether a specific clause belongs in the MOI or the SHA, Burger Huyser Attorneys’ Commercial Law and Contracts team can take the instruction from start to finish. The firm’s commercial practice, led by consultant J’Retha van Rensburg and admitted attorney Mari Köhne, drafts and reviews MOIs, shareholders’ agreements, lease agreements and acquisition or disposal documents. Reach the Linden, Randburg head office on 011 888 0246 (after-hours 061 516 6878) or at 49 First Avenue, Linden, Randburg. The firm carries a 4.8/5 average across 250+ Google reviews and was recognised as Commercial Law Firm of the Year 2025 (5 Star Lawyers Awards).