---
title: Short Form Shareholders’ Agreement
excerpt: 
date: 2024-08-22T09:35:08Z
modified: 2025-07-23T11:29:21Z
file_type: md
permalink: clauses/short-form-shareholders-agreement.html
wpid: 5813
status: publish
type: clause
jurisdiction:
  - Australia
maintenance-status:
  - Not maintained
practice-area:
  - Banking and finance
  - Commercial
  - Environmental, social and governance (ESG)
  - Private equity and investment management
eleventyComputed:
  clause_child_name: "Ruby's Clause"
  clause_summary: Amendments to a standard early stage shareholders’ agreement for SMEs that enable investors to hold an SME to account on climate change issues and align all parties’ interests with achieving net zero.
  clause_last_updated_date: 2024-09-10
layout: layouts/clause.njk
---

# Short Form Shareholders’ Agreement

## Child’s name

Ruby's Clause

## Summary

Amendments to a standard early stage shareholders’ agreement for SMEs that enable investors to hold an SME to account on climate change issues and align all parties’ interests with achieving net zero.

## What this clause does

A short form Green Shareholders’ Agreement for small or medium enterprises (SMEs), enabling shareholders to embed alignment with the Paris Agreement goals (as embedded in the Climate Change Act 2022 (Cth)) at the highest level of the SME. This allows SMEs to prioritise these long-term ESG-related goals over short-term, fast growth-related goals to deliver better performance and long-term value for the SME and its stakeholders or shareholders.

## Clause Content

*\[Drafting note: Capitalized terms relate to either a defined term in this clause or a defined term in the main agreement that this clause is designed to be inserted into.\]*

**1. Business of the Company**

1.1 The Shareholders must each act in good faith to promote the best interests of the Company and to ensure that the Business is conducted and developed in accordance with good business practice. Any business plan for the Company that is adopted should further the following (with equal emphasis):

1.1.1 The Capital Purpose; and

1.1.2 The Net Zero Transition Plan.

**2. Carbon Footprint management**

2.1 In each financial year, the Board must determine the Net Zero Transition Plan, including confirming the Net Zero Target Date.

2.2 The Board must review and evaluate the impact of the Company’s actions to reduce its Carbon Footprint on a quarterly basis. It must consider the Company’s progress towards achieving its Net Zero Transition Plan as part of that evaluation.

2.3 During this Agreement, the Company and each of the Shareholders agree that, in each financial year:

2.3.1 Each Shareholder must Offset an amount of Carbon Dioxide Equivalent (CO2e) units equal to that Shareholder’s share of the total annual Carbon Footprint in the preceding financial year, where that Shareholder’s share is determined by reference to that Shareholder’s percentage holding of Shares in the Company at the end of the preceding financial year; and

2.3.2 The Company must Offset its Residual Emissions, as calculated at the end of the preceding financial year\[, in accordance with the Offsetting Strategy\].

2.4 Each Shareholder must provide evidence of its compliance with clause 2.3 as soon as reasonably practicable following the end of each financial year, but in any event by no later than \[1 (one) month\] after the end of that financial year.

2.5 The obligations under clause 2.3 cease to apply in any financial year where the Company achieves Net Zero status for the preceding financial year. In this event, each Shareholder must:

2.5.1 Offset, in the current financial year, an amount of carbon credits to be determined at that Shareholder's own discretion; and

2.5.2 Provide evidence of their Offsetting for that financial year as soon as reasonably practicable following the end of that financial year.

**Schedule \[●\]**

**Matters requiring Shareholder consent**

**Company operations**

1\. Entering into any contract, transaction or arrangement in relation to the Company that is likely to impede the achievement of the Net Zero Transition Plan.

2\. Making any change to the Net Zero Target Date.
