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Shareholders Agreement Template – South Africa
A shareholders agreement governs the relationship between the shareholders of a South African private company (Pty) Ltd. Our free template covers share transfers, pre-emptive rights, tag-along and drag-along provisions, dividend policy, and director appointment rights under the Companies Act 71 of 2008.
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SHAREHOLDERS AGREEMENT
SHAREHOLDER 1
Thabo Nkosi
12 Jan Smuts Avenue, Parktown, Johannesburg 2193
ID/Reg 8008155800084
ID/Reg 8008155800084
By: Founder and CEO
SHAREHOLDER 2
Priya Pillay
8 Boundary Road, Century City, Cape Town 7441
ID/Reg 8205250200085
ID/Reg 8205250200085
By: Co-Founder and CFO
SHAREHOLDER 3
James van der Berg
3 Somerset Road, Green Point, Cape Town 8005
ID/Reg 7903185800081
ID/Reg 7903185800081
By: CTO
SHAREHOLDER 4
Nomvula Khumalo
21 Crown Mines Road, Sandton, Johannesburg 2196
ID/Reg 8702145900082
ID/Reg 8702145900082
By: Head of Sales
SHAREHOLDER 5
Khulani Investments (Pty) Ltd
8 Sloane Street, Bryanston, Sandton 2191
ID/Reg 2023/456789/07
ID/Reg 2023/456789/07
By: Non-Executive
THE COMPANY
AfriTech Innovations (Pty) Ltd
5 Melrose Boulevard, Melrose Arch, Johannesburg 2196
Reg 2022/123456/07
Reg 2022/123456/07
Company: AfriTech Innovations (Pty) Ltd · Reg 2022/123456/07
Effective: 1 May 2026 · Shares: 30% / 25% / 20% / 15% / 10%
This Shareholders Agreement ("Agreement") is entered into as of 1 May 2026 by and among Thabo Nkosi, Priya Pillay, James van der Berg, Nomvula Khumalo, and Khulani Investments (Pty) Ltd (individually a "Shareholder" and collectively the "Shareholders") of AfriTech Innovations (Pty) Ltd (registration number 2022/123456/07, having its registered office at 5 Melrose Boulevard, Melrose Arch, Johannesburg 2196) (the "Company"). The Company joins this Agreement for the purpose of acknowledging and giving effect to its provisions. This Agreement supplements the Company's Memorandum of Incorporation (the "MOI") adopted on 15 March 2022 and is governed by the Companies Act 71 of 2008 (as amended by the Companies Amendment Act 16 of 2024 and the Companies Second Amendment Act 17 of 2024, both effective 27 December 2024), the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022, and the common law of contract.
1.
MEMORANDUM OF INCORPORATION ALIGNMENT
This Agreement is concluded in terms of section 15(7) of the Companies Act 71 of 2008, which permits Shareholders to enter into an agreement on any matter relating to the Company, provided that any provision inconsistent with the Companies Act or with the MOI is void to the extent of the inconsistency. The Shareholders accordingly undertake: (a) to procure that the MOI is amended to reflect the matters addressed in this Agreement to the extent reasonably necessary; (b) not to vote in favour of any MOI amendment that would render any provision of this Agreement inconsistent with the MOI or the Companies Act; and (c) to interpret this Agreement, wherever reasonably possible, in a manner consistent with the Companies Act and the MOI. Where an inconsistency cannot be reconciled, the Companies Act and the MOI shall prevail, but the Shareholders shall remain bound inter se by any unaffected provisions of this Agreement.
2.
SHAREHOLDING
As at the Effective Date, the issued share capital of the Company comprises 100 Ordinary Shares of no par value, held as follows:
| Thabo Nkosi (30%) | 30 shares |
| Priya Pillay (25%) | 25 shares |
| James van der Berg (20%) | 20 shares |
| Nomvula Khumalo (15%) | 15 shares |
| Khulani Investments (Pty) Ltd (10%) | 10 shares |
| Total Issued | 100 shares (100%) |
3.
BOARD OF DIRECTORS
The Company shall be managed by a Board of Directors (the "Board"). Each Shareholder holding not less than 10% of the issued share capital shall be entitled to appoint and remove one (1) director, with notice in writing to the Company. The chairperson of the Board shall be appointed by majority resolution of the Board. Board meetings shall be held at least once each calendar quarter, and may be held in person, by telephone or by video conference as permitted by section 73 of the Companies Act 71 of 2008. Board decisions shall require the approval of a simple majority of all directors then in office. A director with a personal financial interest in a matter shall recuse themselves from voting on that matter and shall not be counted in the quorum, in accordance with section 75 of the Companies Act. Each director owes the standards of conduct prescribed by sections 75-77 of the Companies Act, including the duty to act in good faith, in the best interests of the Company, and with the degree of care, skill and diligence reasonably expected of a person in that position.
4.
SHAREHOLDERS MEETINGS
Shareholders' meetings shall be convened and conducted in accordance with sections 61 to 66 of the Companies Act 71 of 2008. Notice of every Shareholders' meeting shall be given in writing not less than 15 business days before the meeting, save that Shareholders entitled to vote may unanimously consent to shorter notice. Ordinary resolutions shall require not less than two-thirds (66.7%) of the voting rights present at the meeting. Special resolutions — required by statute for, among other matters, amendment of the MOI, the approval of any merger or scheme of arrangement, the disposal of all or substantially all of the Company's assets, share buy-backs under section 48 (as amended by the Companies Amendment Act 16 of 2024), the granting of financial assistance under sections 44 and 45, and the reduction of capital — shall require not less than seventy-five percent (75%) of the voting rights exercised on the resolution, as required by section 65(9) of the Companies Act. Resolutions may be passed by round-robin written resolution signed by Shareholders entitled to exercise the requisite voting rights, in accordance with section 60.
5.
RESERVED MATTERS
Notwithstanding any general authority of the Board, none of the following matters ("Reserved Matters") shall be taken by the Company without the prior written consent of Shareholders holding not less than 66.7% of the issued share capital: (a) any single borrowing, overdraft facility or finance lease exceeding ZAR 1 000 000; (b) the granting of any guarantee, suretyship or indemnity in favour of any third party; (c) the issue of any shares, options, warrants, convertible instruments or other dilutive securities; (d) any related-party transaction within the meaning of the Companies Act; (e) any material change in the nature, scale or geographic scope of the Company's business; (f) the appointment or removal of the chief executive officer, chief financial officer or any prescribed officer; (g) approval of the annual budget and any amendment exceeding ten percent (10%) of an approved line item; (h) the commencement, settlement or compromise of any litigation or arbitration where the value or exposure exceeds ZAR 500 000; (i) the entry into any lease, supply, distribution or service contract exceeding ZAR 500 000 in value or thirty-six (36) months in duration; (j) the sale, transfer or disposition of all or substantially all of the Company's assets; (k) any voluntary winding-up or business rescue filing; and (l) any acquisition or merger of or by another business.
6.
SHARE BUY-BACKS
Any acquisition by the Company of its own shares shall be carried out in accordance with section 48 of the Companies Act 71 of 2008, as substituted by section 7 of the Companies Amendment Act 16 of 2024 (effective 27 December 2024). Save where the acquisition is (i) pursuant to a pro-rata offer made to all Shareholders of the affected class on the same terms, or (ii) effected through a recognised stock exchange on which the Company's shares are traded, every share buy-back shall require the prior approval of the Shareholders by special resolution (not less than seventy-five percent (75%) of the voting rights exercised), in addition to a board resolution applying the solvency-and-liquidity test under section 4 of the Companies Act. The Shareholders record that the previous five percent (5%) board-only threshold for small repurchases was repealed with effect from 27 December 2024; all non-pro-rata buy-backs now require a special resolution irrespective of size.
7.
TRANSFER RESTRICTIONS
No Shareholder may sell, transfer, donate, encumber, pledge or otherwise dispose of all or any part of its shares in the Company without the prior written consent of Shareholders holding a majority of the remaining issued shares (excluding the disposing Shareholder). Any purported transfer in breach of this clause is void and shall not be registered in the securities register. This restriction is consistent with the private-company transfer restrictions contemplated in section 8(2)(b)(ii) of the Companies Act 71 of 2008 and shall be reflected in the MOI of the Company. The Company shall not register any transfer in breach of this clause and shall procure that its company secretary or transfer secretary refuses to give effect to any such purported transfer.
8.
PRE-EMPTIVE RIGHTS
Before any Shareholder (the "Selling Shareholder") transfers any shares to a third party, the Selling Shareholder shall first offer those shares to the other Shareholders (the "Offeree Shareholders") in writing (the "Offer Notice"), pro-rata to their existing shareholdings (excluding the Selling Shareholder), at the same price and on the same terms as the proposed third-party transaction. The Offeree Shareholders shall have 20 business days from receipt of the Offer Notice to accept the offer in writing. Shares not taken up by the Offeree Shareholders within the acceptance period may be transferred to the proposed third party within ninety (90) calendar days, on the same terms as the original Offer Notice and subject in all cases to clause 7 above. This clause supplements the statutory pre-emption on the issue of new shares for cash under section 39 of the Companies Act 71 of 2008.
9.
BENEFICIAL OWNERSHIP AND SECURITIES REGISTER
The Company shall maintain a securities register in accordance with sections 50 and 51 of the Companies Act 71 of 2008 and a beneficial ownership register in accordance with section 56(7) of the Companies Act as inserted by the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022. The Shareholders appoint Thabo Nkosi as the designated representative responsible for filing the annual Beneficial Ownership declaration with the Companies and Intellectual Property Commission ("CIPC") on the CIPC eServices platform, together with the annual return. The Shareholders record that the CIPC has, with effect from 1 July 2024, imposed a hard-stop functionality whereby the Company's annual return cannot be filed without an up-to-date Beneficial Ownership declaration, and that failure to file exposes the Company to administrative fines under the Companies Act and the FIC Act (Financial Intelligence Centre Act 38 of 2001). Each Shareholder undertakes to provide all information reasonably required by the designated representative within seven (7) business days of any request.
10.
APPRAISAL RIGHTS
Nothing in this Agreement excludes the appraisal rights of dissenting Shareholders under section 164 of the Companies Act 71 of 2008. A Shareholder who, prior to a vote on a matter giving rise to appraisal rights (including any merger, scheme of arrangement, or fundamental transaction within the meaning of sections 112, 113, and 114), has notified the Company in writing of its objection to the resolution and has voted against it, may demand that the Company pay fair value for its shares in accordance with the procedure in section 164. The Shareholders acknowledge that section 164 is a statutory right that cannot be excluded by contract.
11.
INFORMATION RIGHTS
Each Shareholder shall be entitled to inspect and copy, free of charge, the records of the Company specified in section 26(1) of the Companies Act 71 of 2008, including the MOI, the rules (if any), the records of the Company's directors, the securities register and the annual financial statements for the preceding seven (7) years. In addition, the Board shall procure that each Shareholder receives: (a) within five (5) months of each financial year end (28/02), the audited or independently reviewed annual financial statements of the Company; (b) within thirty (30) days of each quarter end, an unaudited management account and commentary; and (c) on reasonable notice, access to the Company's books, records and premises for the purpose of a bona fide inspection. The Shareholders acknowledge that the right of access in section 26 cannot be contractually waived to the detriment of any Shareholder.
12.
DISTRIBUTIONS AND SOLVENCY
All distributions by the Company (whether dividends, share buy-backs or capital reductions) shall be subject to the solvency-and-liquidity test in section 4 of the Companies Act 71 of 2008. The Board shall be satisfied, by reasonable enquiry, that immediately after the distribution: (a) the assets of the Company, fairly valued, equal or exceed its liabilities; and (b) the Company will be able to pay its debts as they fall due in the ordinary course of business for the next twelve (12) months. Distributions shall be made pro-rata to the issued shares of the class, unless a different distribution is approved by special resolution. No Shareholder shall have any right to a distribution that has not been duly declared by the Board after satisfaction of the solvency-and-liquidity test.
13.
DRAG-ALONG RIGHTS
If Shareholders collectively holding not less than 75% of the issued share capital (the "Dragging Shareholders") agree in writing to sell all of their shares to a bona fide third-party purchaser dealing at arm's length (the "Proposed Buyer"), the Dragging Shareholders shall have the right (the "Drag-Along Right") to require all other Shareholders (the "Dragged Shareholders") to sell their shares to the Proposed Buyer on substantially the same price per share and substantially the same terms and conditions. The Dragging Shareholders shall give written notice to the Dragged Shareholders not less than thirty (30) business days before completion of the proposed sale (the "Drag Notice"). On receipt of the Drag Notice, each Dragged Shareholder shall execute all transfer documents and take all reasonable steps to give effect to the sale. The appraisal rights under section 164 of the Companies Act shall remain available to any Dragged Shareholder who duly dissents. The Drag-Along Right shall not require any Dragged Shareholder to give warranties or indemnities beyond title to its shares, full power and authority, and absence of insolvency.
14.
TAG-ALONG RIGHTS
If any Shareholder (the "Selling Shareholder") proposes to transfer shares representing 20% or more of the issued share capital to a third party, each other Shareholder (a "Tag-Along Shareholder") shall have the right (but not the obligation) to participate in such sale on substantially the same price per share and substantially the same terms and conditions, by giving written notice to the Selling Shareholder within fifteen (15) business days of receipt of notice of the proposed sale (the "Tag-Along Notice"). The Selling Shareholder shall not complete the proposed sale unless the third-party purchaser agrees to acquire all shares duly tagged. If the Tag-Along Shareholder elects to tag along, the number of its shares included in the sale shall be pro-rata to its shareholding relative to the other Shareholders electing to tag along.
15.
ANTI-DILUTION PROTECTION
If, after the Effective Date, the Company issues any shares (or any instrument convertible into shares) at a subscription price per share lower than the price per share at which the protected Shareholders last subscribed (a "Dilutive Issue"), the affected protected Shareholders shall be entitled to a broad-based weighted-average adjustment — the conversion price is adjusted using the standard weighted-average formula (CP2 = CP1 × (A + B) / (A + C), where A = pre-money shares outstanding, B = shares the new investment would have purchased at the old price, and C = shares actually issued). The Company shall not effect any Dilutive Issue without first notifying the protected Shareholders in writing and giving them an opportunity to exercise their anti-dilution protection. This protection is in addition to the pre-emption right under clause 8 above and the statutory pre-emption under section 39 of the Companies Act.
16.
FOUNDER SHARE VESTING — GOOD LEAVER AND BAD LEAVER
The shares held by each Shareholder identified as a "Founder" (the "Founder Shares") shall be subject to vesting over a period of 48 months from the Effective Date, with a vesting cliff of 12 months. No Founder Shares shall vest before the expiry of the cliff; on the cliff date, an amount equal to 12/48 of the Founder Shares shall vest in a lump sum, with the balance vesting in equal monthly instalments thereafter. Good Leaver event (death, permanent incapacity, removal without cause, retirement at agreed age): the Founder retains all vested shares and forfeits all unvested shares at par value. Bad Leaver event (resignation before vesting complete, dismissal for gross misconduct or material breach, voluntary departure without remaining Shareholders' consent): the Founder forfeits all unvested shares at par value AND the remaining Shareholders shall have an option, exercisable within sixty (60) days, to acquire all of the Founder's vested shares at the lower of (i) par value and (ii) fair market value determined under the buy-out provisions of this Agreement. Forfeited shares revert to the Company or are reallocated to the remaining Founders pro-rata, at the election of the Board.
17.
CAPITAL CALLS
The Shareholders may, by ordinary resolution, call for additional capital from all Shareholders pro-rata to their shareholdings (a "Capital Call"). Each Shareholder shall pay its pro-rata share of the called amount within thirty (30) business days of the date of the Capital Call notice. If a Shareholder (the "Defaulting Shareholder") fails to pay its pro-rata share by the due date: (a) it shall forfeit 50% of the called amount as a penalty; (b) the non-defaulting Shareholders shall have the right, exercisable within thirty (30) days, to subscribe for the shortfall pro-rata to their shareholdings (or, failing which, in such proportions as they may agree); and (c) the Defaulting Shareholder's shareholding shall be diluted accordingly through the issue of new shares at the Capital Call price to the non-defaulting Shareholders. All Capital Calls shall be implemented in accordance with the Companies Act, including the pre-emption right under section 39 and the solvency-and-liquidity test under section 4.
18.
DIVIDEND POLICY
Subject always to the solvency-and-liquidity test under section 4 of the Companies Act 71 of 2008, the Board shall declare and pay a dividend of not less than 30% of the Company's after-tax net profit in each financial year. The Board may suspend or reduce the mandatory dividend only if (a) the Company has insufficient retained earnings or distributable reserves; (b) the solvency-and-liquidity test cannot be satisfied; or (c) material capital expenditure or debt repayment obligations falling due in the succeeding financial year would require retention of such funds. Any amount not distributed shall be retained for working capital and growth. Dividends shall be distributed pro-rata to the issued shares.
19.
CONFIDENTIALITY
Each Shareholder undertakes to keep the terms of this Agreement and all non-public commercial, financial, technical and customer information of the Company strictly confidential during the term and for five (5) years thereafter. No Shareholder shall make any public statement about the Company's affairs without the prior written consent of the other Shareholders, save where disclosure is required by law, regulatory authority or court order. Shareholders may disclose information to their professional advisors (attorneys, auditors, tax practitioners) provided such persons are bound by equivalent confidentiality obligations. Where Company information constitutes personal information under the Protection of Personal Information Act 4 of 2013 (POPIA), the Shareholders shall comply with Chapter 3 of POPIA (conditions for lawful processing) and shall use such information only for purposes connected with their rights and obligations under this Agreement.
20.
ANTI-BRIBERY AND COMPLIANCE
Each Shareholder warrants that neither it nor any of its representatives have, in connection with the Company or its business, paid, offered, promised or authorised any payment, gift or other thing of value to any public official or private person with the intent of obtaining or retaining business or any improper advantage, in contravention of the Prevention and Combating of Corrupt Activities Act 12 of 2004 (PRECCA), the UK Bribery Act 2010, the US Foreign Corrupt Practices Act, or any equivalent anti-bribery legislation. The Company shall implement and maintain reasonable adequate procedures to prevent corruption, including a written anti-bribery policy, mandatory training of directors and senior employees, a confidential reporting channel, and risk-based due diligence on counterparties and intermediaries. Any breach of this clause by a Shareholder shall constitute a material breach entitling the other Shareholders to invoke the buy-out provisions of this Agreement.
21.
DEADLOCK RESOLUTION
If the Board or the Shareholders are unable to agree on a Reserved Matter or other material decision within thirty (30) calendar days of a first vote (a "Deadlock"), the Shareholders shall first attempt to resolve the Deadlock by good-faith negotiation between their respective chief executives (or equivalent) within a further period of fifteen (15) business days. If the Deadlock is not resolved, the matter shall be resolved through a "shotgun" buy-sell: any Shareholder (the "Offering Shareholder") may serve a written notice on the other Shareholders specifying a price per share. Each other Shareholder shall, within thirty (30) calendar days, elect either to sell all of its shares at that price or to purchase all of the Offering Shareholder's shares at that price. Failure to elect within the stipulated period shall constitute an election to sell. Nothing in this clause prevents a Shareholder from applying to the High Court under section 163 of the Companies Act 71 of 2008 (oppressive or unfairly prejudicial conduct) — that statutory remedy cannot be excluded by contract — or from seeking urgent interdictory relief.
22.
RESTRAINT OF TRADE
For a period of twenty-four (24) months following the disposal by a Shareholder of all of its shares in the Company or the cessation of its role as a director or executive officer of the Company (the "Exit Date"), the outgoing Shareholder shall not, within the Province in which the Company had its principal place of business at the Exit Date, directly or indirectly: (a) carry on, be employed by, or be engaged in a business that competes with the Company's principal business as conducted at the Exit Date; (b) solicit or entice away any employee, director or independent contractor of the Company; or (c) solicit any customer or client of the Company with whom the outgoing Shareholder had material contact in the twenty-four (24) months immediately preceding the Exit Date. The Shareholders record that this restraint is intended to protect a legitimate proprietary interest in the Company's goodwill, confidential information and customer relationships, that it is reasonable in scope, duration and geographic extent in the light of those interests, and that it is enforceable consistent with Magna Alloys and Research (SA) (Pty) Ltd v Ellis 1984 (4) SA 874 (A) and subsequent jurisprudence including Reddy v Siemens Telecommunications (Pty) Ltd 2007 (2) SA 486 (SCA). If any part of this clause is found to be unreasonable, the Shareholders agree that the clause shall be enforced to the maximum extent that is reasonable.
23.
ARBITRATION
Any dispute arising out of or in connection with this Agreement (other than a Deadlock referred to the deadlock mechanism, and other than an application for urgent interdictory relief or a remedy under section 163 of the Companies Act 71 of 2008) shall be finally resolved by arbitration administered by the Arbitration Foundation of Southern Africa (AFSA) under the AFSA Commercial Rules. The seat and venue shall be Johannesburg, South Africa. The language of arbitration shall be English. A sole arbitrator shall be appointed unless the parties agree otherwise. The arbitration shall be governed by the Arbitration Act 42 of 1965. Arbitral awards shall be final and binding.
24.
NOTICES
All notices, demands and other communications under this Agreement shall be in writing and shall be delivered (a) by hand, (b) by registered post or courier, or (c) by email with read receipt requested. Notices shall be sent to the addresses recorded for each Shareholder above, or to such other address as a Shareholder may notify in writing from time to time. A notice shall be deemed received: (i) if delivered by hand, on the day of delivery; (ii) if by registered post or courier, on the seventh (7th) business day after dispatch; and (iii) if by email, on the next business day after dispatch (in the absence of bounce-back).
25.
ELECTRONIC EXECUTION
This Agreement may be signed electronically. Electronic signatures are valid, admissible and enforceable under sections 11 and 13 of the Electronic Communications and Transactions Act 25 of 2002 (ECT Act). Where an advanced electronic signature is used, it shall be presumed to be valid in terms of section 13(4) of the ECT Act unless the contrary is proved.
26.
GENERAL PROVISIONS
Entire Agreement: This Agreement constitutes the entire agreement between the Shareholders with respect to its subject matter and supersedes all prior discussions and agreements.
Amendment: No amendment is valid unless in writing and signed by all Shareholders.
Severability: Any provision found to be invalid shall be severed without affecting the remainder.
Waiver: Failure or delay in enforcing any right shall not constitute a waiver of that or any other right.
Binding on Successors: This Agreement binds and inures to the benefit of the parties and their permitted successors, heirs and assigns.
Accession: Any new shareholder of the Company shall be required, as a condition of being registered in the securities register, to execute an accession deed agreeing to be bound by this Agreement as a Shareholder.
Counterparts: This Agreement may be signed in counterparts, each of which is an original and which together constitute one instrument.
Costs: Each Shareholder bears its own costs of negotiating this Agreement; subsequent enforcement costs are recoverable by the prevailing party on the attorney-and-own-client scale.
Amendment: No amendment is valid unless in writing and signed by all Shareholders.
Severability: Any provision found to be invalid shall be severed without affecting the remainder.
Waiver: Failure or delay in enforcing any right shall not constitute a waiver of that or any other right.
Binding on Successors: This Agreement binds and inures to the benefit of the parties and their permitted successors, heirs and assigns.
Accession: Any new shareholder of the Company shall be required, as a condition of being registered in the securities register, to execute an accession deed agreeing to be bound by this Agreement as a Shareholder.
Counterparts: This Agreement may be signed in counterparts, each of which is an original and which together constitute one instrument.
Costs: Each Shareholder bears its own costs of negotiating this Agreement; subsequent enforcement costs are recoverable by the prevailing party on the attorney-and-own-client scale.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date indicated.
SHAREHOLDER 1
Thabo Nkosi
Founder and CEO
Date: ____________________
SHAREHOLDER 2
Priya Pillay
Co-Founder and CFO
Date: ____________________
SHAREHOLDER 3
James van der Berg
CTO
Date: ____________________
SHAREHOLDER 4
Nomvula Khumalo
Head of Sales
Date: ____________________
SHAREHOLDER 5
Khulani Investments (Pty) Ltd
Non-Executive
Date: ____________________
FOR AND ON BEHALF OF THE COMPANY
Duly authorised director
AfriTech Innovations (Pty) Ltd
Date: ____________________
Available as a print-ready PDF or an editable Microsoft Word (.docx) file.
What Is a Shareholders Agreement?
A shareholders agreement is a private contract between the shareholders of a company that supplements the company's Memorandum of Incorporation (MOI). It governs the relationship between shareholders, the management of the company, and the rights and obligations that apply to the shareholders as between themselves. Unlike the MOI, a shareholders agreement is not filed with the Companies and Intellectual Property Commission (CIPC) and remains confidential to the parties.
In South Africa, private companies are incorporated and governed under the Companies Act 71 of 2008. The Act provides a default framework, but shareholders are free to agree on arrangements that differ from or supplement the default rules by including them in the MOI or in a shareholders agreement. A shareholders agreement is particularly valuable in closely held companies with a small number of shareholders — it provides certainty on issues such as how shares may be sold, how deadlocks are resolved, and what happens when a shareholder wishes to exit the company or dies.
South African company law under the Companies Act 71 of 2008 provides considerable flexibility for shareholders to regulate their relationships by agreement. The Act's provisions on fundamental transactions and shareholder approvals set a statutory floor, and the shareholders agreement operates within and above this floor. Where a shareholders agreement is inconsistent with the Companies Act, the Act prevails. A well-drafted South African shareholders agreement should also address POPIA 4 of 2013 compliance for the company's data processing activities, and should consider the tax consequences of share transfers and dividend distributions under the Income Tax Act 58 of 1962.
What's Covered in This Template
Our South African shareholders agreement template covers the essential governance and commercial arrangements for a private company.
Company and Shareholder Details
Company registration number (CIPC), shareholders' names, and their respective shareholdings.
Board Composition and Director Appointments
Each shareholder's right to appoint one or more directors and the procedure for removing appointed directors.
Voting and Decision-Making
Ordinary and special resolution thresholds, reserved matters requiring unanimous or supermajority approval.
Share Transfer Restrictions
Pre-emptive rights of first refusal on proposed share transfers between shareholders and to third parties.
Tag-Along Rights
Minority shareholders' right to sell their shares on the same terms as the majority in a third-party sale.
Drag-Along Rights
Majority shareholders' right to compel the minority to sell in a qualifying third-party acquisition.
Share Valuation Mechanism
Agreed method for determining the fair value of shares on a buyout — independent auditor determination or agreed formula.
Dividend Policy
Agreed policy on the declaration and payment of dividends, and shareholder loan repayments.
Non-Compete and Non-Solicitation
Restrictions on shareholders competing with the company or soliciting its clients and employees while and after they hold shares.
Deadlock Resolution
Procedure for resolving deadlocks in board or shareholder decisions, including escalation and compulsory buyout triggers.
Exit Events and Buyout Rights
Events triggering a compulsory buyout — death, insolvency, resignation, or conviction of a shareholder.
Governing Law
South African law and Companies Act 71 of 2008 govern the agreement, with the appropriate High Court Division having jurisdiction.
How to Create a Shareholders Agreement in South Africa
Follow these steps to produce a South African shareholders agreement that protects all shareholders.
- 1
Identify the Company and Shareholders
Record the company's CIPC registration number and the names and shareholdings of all shareholders.
- 2
Agree on Board and Governance Structure
Specify director appointment rights, reserved matters, and decision-making thresholds.
- 3
Set Share Transfer Rules
Define pre-emptive rights, tag-along, drag-along, and the share valuation method for buyouts.
- 4
Address Dividends, Non-Competes, and Exits
Agree on dividend policy, shareholder non-compete obligations, and events triggering compulsory share purchases.
- 5
Review and Download
Review the shareholders agreement against the company's MOI and South African law, then download as a PDF.
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Continue editing in Word after download. Add custom clauses, reuse the template for similar agreements, or share with a colleague for collaborative review.
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Legal Considerations
South African shareholders agreements operate within the mandatory framework of the Companies Act 71 of 2008.
This template is for informational purposes only and does not constitute legal advice. Consult a qualified South African attorney for advice specific to your situation.
Reviewed for South African law
Relationship with the MOI and Companies Act
Section 15 of the Companies Act 71 of 2008 provides that a company's MOI is a binding contract between the company and each shareholder. A shareholders agreement supplements the MOI but cannot override the Companies Act or contradict the MOI without amending both documents. Any provision in a shareholders agreement that is inconsistent with the Companies Act is void to that extent. A South African attorney should ensure alignment between the shareholders agreement and the MOI.
Appraisal Rights and Fundamental Transactions
The Companies Act 71 of 2008 grants dissenting shareholders appraisal rights (the right to demand fair value for their shares) in connection with fundamental transactions such as mergers, disposals of all or substantially all assets, and amalgamations. These statutory rights cannot be excluded by a shareholders agreement. The agreement can, however, specify agreed valuation mechanisms and timelines that apply in non-statutory buyout situations.
Dividend Withholding Tax
Dividends declared by a South African company are subject to dividends withholding tax (DWT) at 20% under the Income Tax Act 58 of 1962 as amended. The shareholders agreement should reflect this obligation and confirm that dividends are paid net of DWT unless an exemption applies — for example, where the recipient is a South African company or certain trusts and retirement funds. A tax adviser should be consulted to confirm the applicable DWT treatment.
Frequently Asked Questions
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