Discover What Should a Shareholders Agreement Template Include in South Africa
A shareholders agreement template in South Africa is one of the most critical legal documents for companies with multiple owners. This document outlines the rights, duties, and obligations of shareholders and governs the internal operations of a company beyond what’s included in the Companies Act or Memorandum of Incorporation (MOI).
At Burger Huyser Attorneys, we specialise in drafting custom shareholder agreements tailored to South African businesses. Whether you’re launching a startup or restructuring an existing company, this agreement ensures your shareholders’ relationships are protected from legal ambiguity and future disputes.
Key Clauses Every Shareholders Agreement Template Should Include
If you’re wondering what a comprehensive shareholders agreement template in South Africa should cover, here are the most essential components:
1. Shareholding Structure
This section outlines how shares are distributed among shareholders and whether any classes of shares (e.g., ordinary, preference) exist. It should also clearly explain the percentage ownership each shareholder holds and how those shares were issued or acquired.
2. Decision-Making and Voting Rights
Who makes the decisions? This part defines the types of decisions that require a simple majority or unanimous vote. These can include hiring executives, acquiring assets, or restructuring the business.
3. Rights and Responsibilities of Shareholders
Each shareholder’s duties should be clearly outlined, including their rights to dividends, access to financial records, and input into major company decisions. Responsibilities may also include capital contributions or active participation in operations.
Protecting the Company and Its Shareholders
4. Transfer of Shares
A solid agreement should define what happens when a shareholder wants to sell or transfer shares. Can shares be sold to outsiders? Do existing shareholders have a right of first refusal? These clauses help prevent unwanted third-party ownership.
5. Deadlock Resolution Mechanisms
Disagreements are inevitable. Your agreement must outline a method to resolve deadlocks—whether through mediation, arbitration, or a buyout clause.
6. Exit Strategy and Buy-Sell Agreements
In the case of resignation, retirement, or death, an exit strategy ensures business continuity. This section provides rules for valuation and sale of shares when a shareholder exits.
Legal Compliance and Company-Specific Terms
7. Alignment With the Companies Act
While a shareholders agreement works alongside the MOI, it must still comply with the Companies Act of South Africa. Including this alignment helps avoid future legal disputes or regulatory issues.
8. Confidentiality and Non-Compete Clauses
To protect trade secrets and prevent competition, confidentiality and restraint of trade clauses are vital, especially in competitive industries.
9. Dispute Resolution and Jurisdiction
The agreement should specify how and where disputes will be resolved—typically through South African courts or alternative dispute resolution (ADR) mechanisms.
Why You Shouldn’t Rely on a Generic Template
Every company is unique. Generic templates found online may not comply with South African law or reflect the nuances of your business. At Burger Huyser Attorneys, we customise every shareholders agreement template in South Africa to suit your company’s goals, shareholding structure, and risk profile. This proactive approach helps prevent costly legal battles and broken partnerships down the line.
Protect Your Business with a Solid Shareholders Agreement
A professionally drafted shareholders agreement is a cornerstone of business success and legal stability. Don’t leave your company’s future to chance.
Contact Burger Huyser Attorneys today to draft or review your shareholders agreement. Let us help you build a legally secure foundation that protects both your company and its stakeholders.
Contact Burger Huyser Attorneys, and book a consultation.
To speak to one of our experienced attorneys in South Africa for immediate assistance, contact us on the numbers below:
Randburg call 061 516 6878; Roodepoort call 061 516 0091; Sandton call 064 555 3358;  Pretoria call 064 548 4838;
Centurion call 061 516 7117; Alberton call 061 515 4699; Bedfordview call 061 536 3223
DISCLAIMER: Information provided in this article does not, and is not intended to constitute legal advice. READ MORE
