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If you're reviewing a shareholders agreement, you may find that it comes with an attached document known as a deed of accession. A deed of accession is usually signed by new shareholders when they agree to an existing shareholders agreement.
Keep reading to find out what a deed of accession is, when it's needed and what information it needs to include.
What is a deed of accession?
A deed of accession is a document commonly signed by new shareholders. By signing the deed, a new shareholder confirms that they are happy to adhere to the terms and conditions of an existing shareholders agreement.
The shareholders agreement is a binding contract between all shareholders of a company. It outlines the rights and responsibilities of shareholders, as well as how to resolve disputes between shareholders and how shares can be sold or transferred.
Download this deed of accession template at Lawpath
When should I use a deed of accession?
A deed of accession is used when a new person invests in a company. The document is designed to ensure that new shareholders will agree to the shareholders agreement the company already has in place, removing the need to create a new agreement.
So if you want to become a new shareholder in a company, you may be required to sign a deed of accession. On the other side of the coin, if you want to add a new shareholder to your company, you may need a deed of accession written up for the new investor to sign.
Deed of accession vs deed of adherence
A deed of adherence is simply another name for a deed of accession. So if you see a shareholders agreement with a deed of adherence attached, the information in this guide will also apply to that deed.
What does a deed of accession include and not include?
While a deed of accession is an important document, the good news is that it's also a fairly simple one.
What is included in a deed of accession?
The exact information and structure of a deed of accession will vary depending on the company in question and the shareholders agreement already in place. However, it typically includes:
- The date
- The details of the company and the new shareholder
- The details of the selling shareholder (if applicable)
- An acknowledgement by the new shareholder that they have received a copy of the shareholders agreement and that they will comply with its terms
- A clause specifying that each party will cover their own costs for getting the deed written up and executed
Sometimes only the new shareholder will need to sign the deed. In other cases, the company may also be required to sign the document.
What not to include in a deed of accession
It's important to remember that a deed of accession is different to a shareholders agreement. The latter sets out the rights, responsibilities and liabilities of all shareholders, plus details of how the business will be run, voting rights and how shares can be sold. All of this information is meant for a shareholders agreement, not a deed of accession.
A deed of accession should also not be confused with a company's constitution. The constitution specifies how a company will be managed, and all shareholders are bound by it under the Corporations Act.
What are the benefits of a deed of accession?
The main advantage of a deed of accession is that it eliminates the need to scrap an existing shareholders agreement and create a new one. It's therefore much quicker and easier than drawing up a new agreement, not to mention cheaper.
A deed of accession ensures that all shareholders have the same rights and responsibilities regardless of whether they acquired their shares 10 years ago or last week. Existing shareholders also get the peace of mind of knowing that their rights and obligations won't change when a new shareholder joins the company.
Do I need a lawyer for a deed of accession?
A deed of accession is a formal document which has to satisfy specific requirements that outline how it must be written. If you're unsure of those requirements or need help determining what details to include in the document, seek legal advice.
If you're preparing to become a new shareholder and sign a deed of accession, you'll need to pay close attention to the information contained in the shareholders agreement. If you have any concerns about the terms of the agreement, seek legal advice before signing the deed of accession.
Get access to customisable deed of accession templates online
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How do I write a deed of accession?
Many shareholders agreements contain a deed of accession template. There are also plenty of websites that offer access to a range of legal documents and templates, including deeds of accession. You can use these sites to customise a deed for your purposes, sometimes for free and sometimes by paying a fee.
However, you'll need to ensure that you only access templates from reputable websites and that your deed of accession will satisfy all legal requirements. If you're unsure, seek legal advice.
You can also hire a commercial lawyer to create a deed of accession.
Where to get free legal documents and templates like a deed of accession
There are several websites where you can access a range of free legal documents and templates. Some of your options include:
- Lawpath. Lawpath offers a shareholder accession deed template, but you'll need to sign up for a free account in order to access the document.
- Wonder.Legal. You can complete this online template by answering a few questions, and your document is then created in PDF and Word format.
- Australian Investment Council. The council offers a number of document templates on its website, including a shareholders agreement template that features a deed of accession.
Make sure any template you use comes from a reputable website and satisfies all relevant legal requirements.
How can I create a shareholders agreement?
Find out more in our shareholders agreement templates guide.
What if the company issues new shares — is a deed of accession required?
Yes, if you want the new shareholders to be bound to an existing shareholders agreement, they'll need to sign a deed of accession.
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