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Unraveling the Unitholders Agreement -

Its Significance and What it Entails

Unitholders agreements are crucial navigational tools in the world of unit trusts. They establish the regulations for the unitholders and the operational facets of the trust itself. Yet, confusion often arises about the necessity of these agreements and how they differ from the trust deed.

Let's unravel this.

To distinguish a unitholders agreement from a trust deed, it's essential to understand their unique roles. The trust deed generally dictates the fundamental rules of operating a unit trust. However, trust deeds are typically broad in nature, dealing mainly with core, overarching issues. Unitholders agreements, conversely, offer a more extensive and detailed view, dealing specifically with the interactions amongst unitholders in relation to the trust.

But what should you include in your unitholders agreement? The answer is subjective. The unique circumstances of the unitholders and the nature of the investments being pursued by the unit trust set the blueprint for your unitholders agreement. That means every agreement should be customised to suit your specific needs. Yet, there are a few universal elements that every unitholders agreement should address.

Key considerations include the procedures for unitholders entering and exiting the trust. Furthermore, it's crucial to plan for contingencies, such as a unitholder's death or severe disability. Additional essential topics cover decision-making protocols, such as who can assume roles as trustees or trustee company directors, what decisions they can make independently, and which ones require a unitholder vote. Valuation is another aspect that often fuels disagreements between unitholders during the entry or exit of a member, hence, it should also be addressed in the agreement.

So, is a unitholders agreement necessary? We fervently endorse having one. The reason being, while a trust deed lays the foundation for governing a unit trust, it often misses critical details, particularly when unitholders may diverge in their vision or path in the future.

A unitholders agreement provides a more comprehensive set of rules for unitholder interactions and key decision-making processes. It adds an extra layer of protection for unitholders by ensuring all bases are covered, thus making it an invaluable asset for anyone investing in a unit trust.

Contact us today to learn how we can assist you. To get in touch you can connect with us on (03) 8691 3111 or send us an email at

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