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Why do I want a Unitholders’ Agreement?

"Bob co-owns a $500,000 boat with two of his closest business partners – Ben and Jerry. Bob is unrelated to his partners and only engages them for joint business ventures. Bob, Ben and Jerry come to an arrangement that the boat ought to be managed through a Unit Trust, as 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 arising in unit trusts.

Unitholders’ Agreements can be entered into at any time

Unitholders’ Agreements manage the behaviour of unitholders in a unit trust.

Unitholders’ Agreements are cost-effective and allow for:

 

  • alternative dispute resolution clauses for unitholders
  • the issuing, valuation and transfer of units in a unit trust
  • Unitholder insurance - trauma, TPD, life and income protection

 

 

Unitholders’ Agreements outline each unitholder’s rights and obligations for one another. In the case of conflict, dispute resolution clauses manage conflict outside the courtroom. This enables the parties to 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.

Unitholders’ Agreements are supplemental to unit trust deeds. You can build both, Unit Trust Deeds and Unitholders’ Agreements on our website.

Deed of Accession

Our Unitholders’ Agreement also includes a Deed of Accession. When Unitholders become party to a unit trust, they are not bound by the provisions of the pre-existing Unitholders' Agreement. Upon signing the Deed of Accession, the new unitholders are bound to the Unitholders’ Agreement, as if it 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.

Our Unitholders’ Agreement fully utilises the benefits of the latest tax rules

For more legal advice, telephone us. We are a law firm. We can help you answer the questions.

Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
39 Stirling Highway, Nedlands, WA (Post Office Box 5169, Dalkeith, WA 6009)
Mobile: 04777-96959
Direct: 08 6389-0400
Reception: 08 6389-0100
Email: brett@legalconsolidated.com
Skype: brettkennethdavies