If your company has more than one shareholder, a shareholders’ agreement is one of the most important documents you can put in place. It sets the rules between the owners — who can sell their shares, how big decisions are made, and what happens when a shareholder wants to leave or a dispute arises. This guide explains what a shareholders’ agreement is, what it should include, how it differs from your MOI, and what it costs in South Africa.
What is a shareholders’ agreement?
A shareholders’ agreement is a private contract between the shareholders of a company that governs their relationship, their rights, and their obligations towards one another and the company. Unlike the Memorandum of Incorporation (MOI), which is a public document filed with CIPC, the shareholders’ agreement is confidential and can be tailored to the specific commercial arrangement between the owners.
Why every company with two or more shareholders needs one
Most disputes between business partners happen because expectations were never written down. A shareholders’ agreement prevents this by dealing with the difficult questions before they become problems: What if one shareholder wants to sell to an outsider? What if a shareholder dies or becomes insolvent? What if the shareholders deadlock on a major decision? Putting the answers in writing protects everyone and keeps the business running.
Shareholders’ agreement vs MOI: what’s the difference?
The MOI is the company’s founding constitution, filed publicly with CIPC, and it always takes precedence where the two conflict. The shareholders’ agreement is a private contract that sits alongside the MOI and deals with the commercial relationship in more detail. A well-drafted pair works together — the MOI covers the legal framework, and the shareholders’ agreement covers the deal between the owners. If you need a tailored MOI as well, see our guide on custom MOIs.
Key clauses your shareholders’ agreement should include
- Share transfers & pre-emptive rights — existing shareholders get first option before shares are sold to an outsider.
- Buy-sell (exit) provisions — what happens to a shareholder’s shares on death, disability, insolvency, or resignation.
- Decision-making & reserved matters — which decisions need a special majority or unanimous consent.
- Deadlock resolution — a mechanism to break a stalemate without killing the company.
- Dividend policy — how and when profits are distributed.
- Dispute resolution — mediation or arbitration instead of expensive litigation.
- Restraint of trade & confidentiality — protecting the company from a departing shareholder.
What does a shareholders’ agreement cost in South Africa?
Established law firms typically charge between R7,000 and R15,000 for a bespoke shareholders’ agreement. At Bekin Consulting, our agreements are drafted by an admitted attorney from R3,900 — properly tailored to your company, not a generic template — with complex arrangements quoted upfront.
Need a shareholders' agreement drafted?
Drafted by an admitted attorney, tailored to your company — from R3,900.
See Our Legal Services →Frequently Asked Questions
Yes. A shareholders' agreement is a binding contract between the shareholders. However, where it conflicts with the company's MOI or the Companies Act, the MOI and the Act take precedence — which is why the two should be drafted to work together.
Yes. The MOI is a public founding document, while the shareholders' agreement is a private contract covering the commercial relationship in far more detail — share transfers, exits, deadlocks, and dividends. Most companies with more than one owner need both.
Law firms typically charge R7,000 to R15,000. Bekin Consulting drafts bespoke shareholders' agreements by an admitted attorney from R3,900, with complex matters quoted upfront.
Yes. We draft agreements for any number of shareholders. Arrangements with multiple share classes or complex vesting are quoted individually.
Bekin Consulting also handles company registration, CIPC director amendments, and a full range of legal drafting — all under one roof.
