Shareholders agreements don't stop Family Court claims [AU]
Your shareholders agreement probably won't protect your clients' business interests in a divorce. Family Courts have broad powers under the Family Law Act 1975 to achieve "just and equitable" outcomes, and those powers extend to setting aside commercial contracts.
This matters because only 41% of Australian family businesses have shareholders agreements (Family Business Australia Survey). The other 59% are running unprotected, but even those with agreements face court scrutiny in matrimonial proceedings.
What the courts actually do
Family Courts treat business shares as matrimonial assets, regardless of what the shareholders agreement says. The court can revalue interests, force buyouts, or redistribute ownership if it serves the property settlement. Commercial contract terms take second place to Family Law Act provisions.
Kristy-Lee Burns (Owen Hodge Lawyers) flagged this on 23 February 2026, noting business owners routinely assume their agreements provide full protection. They don't.
The gap in protection
Shareholders agreements handle governance, dispute resolution, share transfers, deadlocks and exits. They're crucial for multi-owner firms (especially family businesses) and prevent disputes through escalation mechanisms: negotiation, mediation, arbitration before litigation.
But they're private contracts supplementing the Corporations Act 2001. In family law matters, courts apply different tests. A well-drafted agreement might influence the court's approach to valuation or buyout terms, but it won't bind the court's asset division powers.
What CFOs should flag
Clients with business ownership and relationship risk need family law advice alongside corporate structuring. Discretionary trusts face similar scrutiny (the ATO's already watching trust-to-trust distributions and FTE compliance). No corporate structure is immune from Family Court powers.
Update shareholders agreements via special resolution (75% vote) if they're outdated. But don't sell them as divorce protection. They're governance documents, not family law shields.