In this episode of Tell me law we discus shareholder agreements and how Indigenous businesses can benefit from them.
Matthew Karakoulakis explains that a shareholder’s agreement is a legal contract that sets out the rights and obligations for the parties to the agreement. The company whose shares are in the agreement is also party to the agreement.
He says that the law sees as a company as a distinct person. This involves a lot of things like signing contracts and owning assets. These are things that we can do as people and they can also be done as a company.
He adds that Indigenous people running a business can draw certain benefits from shareholder agreements that aren’t provided through other business arrangements.
He cites the issues of liabilities and obligations as areas where having a shareholder agreement is very beneficial.
“The good news for shareholders and directors is that their liability is limited. Generally, the shareholders’ liability is limited to their shares. Directors themselves are generally, as a starting point, not liable because the company has that liability,” Matthew Karakoulakis says.
One of the many benefits that Matthew also identified for Indigenous businesses is that if they are run as companies with shareholder agreements then it is easy for the ownership of these businesses to be transferred simply by transferring shares.
“The other positive news for Indigenous business is because our family structures are very large, the shareholder structure can allow many shareholders and there can be, especially in large Indigenous families, a real separation of family and Mob.”