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A Unitholders Agreement outlines the specific rights of an investor, known as a unitholder, who owns one or more unit, or share, in a unit trust.
This document formalises the relationship between a trust and its investors, and can help in the event of a dispute by clearly outlining what the parties agreed to.
Our document generator creates a top-tier, custom agreement that automatically adapts to govern shares or securities issued by a company or units of a unit trust. It has been meticulously drafted to standards that meet and sometimes exceed those of the largest Australian and international law firms.
This agreement gives you full control over how important decisions of the business will be made. It offers a comprehensive range of reserved matters and flexibility for each as to whether majority or unanimous approval of the key Unitholders will be required.
The Unitholders Agreement should be used if you would like to lay down the rules and document the relationship between the unitholders of a unit trust.
A Unit holder’s Agreement is also known as:
The parties involved are the unit trust and its unitholders
If you are a unitholder in a trust that holds assets such as a business (it may be your business), you should have a unitholder agreement.
You are not legally required to have one, but it is advisable from a business perspective to execute your unitholder agreement when you are setting up your trust, before any disputes can occur.
Unitholder agreements are quick and simple to execute, cost-effective, and offer great protection.
The agreement also covers what steps to take when a dispute arises, and the roles and responsibilities of all the parties involved.
The agreement clarifies unitholders’ expectations of one another and help avoid misunderstandings and disputes from occurring later on. Obtaining individual legal advice to explain the unitholder agreement prior to unitholders’ signing the agreement further elucidates the governing rules contained in the agreement.
Having these rights clarified in a legal document helps if there is a misunderstanding or dispute later on.
In relation to selling units, as the exiting unitholder may have voting rights, most unitholder agreements include a clause ensuring the exiting unitholder gives other unitholders a chance to purchase their units (at a set or market price) prior to offering them for sale to outside parties.
Drag along/tag along clauses are included and require minority unitholders to agree if the majority unitholders want to sell to a third party purchaser.
This is useful in case there is ever a deadlock between unitholders during a meeting, or an issue that has to be resolved immediately so as not to affect the operation of the trust and its holdings.
Non-competition clauses are often included to prevent unitholders from commencing a competing business or development that has potential to reduce the unit trusts’ business/investment value.
The agreement will require unitholders to declare any conflicts of interests, and ensure confidentiality is maintained at all times – unitholders will be prohibited from disclosing details of the trusts’ activity to outsiders.
Ensuring that process will be undertaken in a fair and legal way for all involved, and without the need for Court intervention.
This agreement will govern the composition of the board of directors of the trustee company, but will not regulate the ownership of shares in the trustee company in detail.
If you want to regulate the ownership of shares in the trustee company in detail, then you will need to either use this form to create a separate shareholders’ agreement for the trustee company, or obtain legal advice.
This agreement assumes there is a trust deed constituting the unit trust that contains provisions governing the unit trust along the lines of a company’s constitution.
If you are concerned that your trust deed may be deficient, please obtain legal advice.
If shares in the trustee company and units in the unit trust will always be held in the same proportions, you can include a clause to that effect in this agreement.
Yes. This agreement becomes legally binding on all parties involved once it is signed.
When a Unit Trust is registered and all parties are fully committed. This agreement ensures everybody is aware of the direction, structure and responsibilities of each Unitholderand knows the process for dispute resolution.
Yes. These requirements are outlined in the Corporations Act 2001.
Drag along and tag along provisions allow majority unitholders to require the minority unitholders to sell their shares. This often happens when a Unit Trust is being taken over by another.
A drag along tag along provision will “drag along” the minority unitholders whilst the majority unitholders are in the process of selling the underlying asset/business and dissolving the unit trust, requiring minority unitholders to sell their units in the process.
Tag along provisions will allow other security holders to “tag along” and require the buyer to make an offer to buy their securities when an offer is made that fulfills the set out criteria.
Drag along and tag along provisions are included in this document.
There are several signing options available. How you sign largely depends on where the parties are located and if they will attend signing together. You can print on paper and sign, or use electronic signature tools such as Docusign or Hellosign.
This document can help you issue a wide variety of securities or units.
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If you have any questions or are uncertain about any aspect of the document, please do not sign it or use it. Contact us directly and we will be happy to assist.
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