A Unitholders Agreement is an agreement between unitholders and the Unit Trust trustee. It overrides a Unit Trust Deed. It sets out how the unit trust is managed. It deals with issues not contained in a Unit Trust Deed. (A Unitholders Agreement is similar to a Shareholders Agreement.)
Unitholders’ Agreements manage the behaviour of unitholders in a unit trust.
Unitholders Agreements outline each unitholder’s rights and obligations for one another.
What if there is conflict? Dispute resolution clauses manage conflict. This is outside the court system. The Unitholders reach a cost-effective solution. As the rights and behaviour of unitholders are managed by the Unitholders Agreement, the opportunity for conflict is substantially reduced.
As with all Legal Consolidated documents you can see a full copy and covering letter of the Unitholders Agreement document. Just press the “Sample” button above.
“Bob co-owns a $500,000 boat with two of his closest business partners – Ben and Jerry. He is unrelated to his partners and only engages them in joint business ventures. Bob, Ben and Jerry come to an arrangement. The boat is managed through a Unit Trust. Everyone contributed different amounts and the market value of the boat is forever fluctuating. All three partners are made Unitholders to the Trust. Bob does not seek any legal or financial advice. A Unitholders Agreement is never signed between the three business partners.
One day, a dispute arises as to the valuation of units Bob and his partners own through the Unit Trust. The unit trust does not contain procedures for valuing units, nor dispute resolution clauses. Because Bob and his business partners did not seek advice nor sign a Unitholders Agreement, their only solution is pursuing time-consuming and costly litigation.”
The Unitholders Agreement saves unitholders, such as Bob, from the headache of litigating disputes.
Yes. You build and sign a Unitholder Agreement many years after you started your Unit Trust.
Over the life of the Unit Trust, it is likely that the Unitholders will want to change or amend the rights between them. The Unitholder Agreement expressly allows you to make changes, merely by:
This is provided the Unitholders unanimously agree.
No, they do not.
Unitholders debating on what the Unit Trust will do and invest in is not a matter of the Unit Trust deed or a Unitholders Agreement. This is much like a company and shareholders agreement. When shareholders debate on how to run the business they don’t usually update the company Constitution or the Shareholders Agreement.
But again, as stated above, once your build the Unitholders Agreement, you can agree on investments by an exchange of emails or minutes.
Family Trusts deeds and Self-Managed Superannuation fund deeds need updating every 5 – 8 years. This is to deal with tax and trust matters. However, Unit Trust Deeds don’t usually need updating. But of course, you can update a Unit Trust, as often as you wish, if all the unitholders agree.
Our Unitholders Agreement includes a Deed of Accession. When Unitholders become a party to a unit trust, they are not bound by the provisions of the pre-existing Unitholders’ Agreement.
But by signing the Deed of Accession, the new unitholders are bound to the Unitholders Agreement, as if the new unitholder was party to it
The Deed of Accession, provided as part of our Unitholders Agreement, enables a speedy and simple binding of new unitholders to the Agreement.
A Unitholders Agreement is a contract between the unitholders. It overrides a Trust Deed. It states how the Unit Trust is managed and how the Unitholders behave amongst themselves. (It is similar to a Shareholders Agreement.)
You need separate agreements for each of these situations:
Telephone us for help building the Unitholders Agreement.
Adj Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
National Australian law firm
Mobile: 0477 796 959
National: 1800 141 612
Email: [email protected]