Heads of agreement to establish a company is a useful document if you need to enter into a shareholders arrangement at a later stage and cater for that at this point in time. Sample "RECITALS A «a14» owns and carries on «a15». B «a4» and «a7» are employed by «a14». C «a14» is the authorised tenant of «a16» ("the Business Premises") upon which «a4» and «a7» wish to conduct the Business. D «a4» and «a7» desire to establish a separate company structure and identity for the establishment of «a17» to operate through and under the name of the Company. E «a4» and «a7» have agreed to constitute the Company and to contribute to the initial capital of the Company and the ongoing capital and funding requirements of the Company in accordance with the terms of this Agreement. F «a4» and «a7» between them will hold all of the issued and allotted ordinary shares in the Company in the following amounts: «a4» - ordinary shares («a18»%) «a7» - ordinary shares («a19»%) G The Parties desire to enter this Agreement for the purposes of recording this Agreement as to the manner in which the Company is to be constituted, and certain aspects as to how the business of the Company is to be conducted, and as to the respective rights and obligations of the Parties. H. This Agreement takes effect as a heads of agreement and will remain binding on the Parties until substituted by a formal agreement. TERM AND OBJECTIVES 2.2 The objectives of the Shareholders in investing in the Company are: 2.2.2 to share the profits of the Business as provided for in this Agreement; and 2.2.3 to ensure that the business standing and reputation of all other companies within the «a14» Group is not affected by any action of the Company. 2.3 In order to fulfil the objectives listed in Clause 2.2, each Shareholder must: 2.3.1 co-operate and use their best endeavours ……………………………… 7 DECISION MAKING 7.1 Subject to the Corporations Act and this Agreement, all decisions of the Shareholders in general meeting will be made by simple majority vote. 7.2 All decisions of the Board in respect of the following matters must be made only with the approval of a unanimous resolution of the Shareholders: 7.2.1 entering into any transaction ……………………………………… 8 MANAGEMENT 8.1 The Company will be managed on a day to day basis by a managing director who will be solely responsible for the Company's activities and operations, and who will report to the Chairman of the Board. 8.2 «a7» will be appointed as the initial managing director for a fixed period …………………………. 8.3 The remuneration of the managing director will be ………………………………"
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(d) Heads of agreement to establish a company
