Shareholders' Agreement Template (Multi-Council Water Organisation) - Guidance Material

Sep 16, 2026

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Guidance material for a Shareholders' Agreement template for a multi-council Water Organisation under the Local Government (Water Services) Act 2025. Explains why councils should agree the SHA in advance to prevent disputes and clarify relationships between shareholders and the Water Organisation. Defines the template’s purpose, including share allocation, reserved matters decision-making, loans and guarantees, statutory commitments, future share issues, handling disagreements or defaults, and miscellaneous matters, with optional delegation via a Shareholder Council.

LanguageEnglish

CategoryLetters

FormatPDF

Pages3

Reading Time1 min

AccessFree to download

Purpose of this document / template

Key considerations for councils

How to use this document / template

Decisions to complete the template

Miscellaneous matters in Schedule 1

GUIDANCE MATERIAL SHAREHOLDERS' AGREEMENT TEMPLATE (MULTI-COUNCIL WATER ORGANISATION) | BACKGROUND The Local Government (Water Services) Act 2025 ("Act") enables a council to
establish a Water Organisation to deliver water services alone or jointly with one or more other councils. A council must prepare foundation documents for a Water Organisation it establishes. If there is more than one shareholder in a Water Organisation, its foundation documents must include a shareholders'agreement (alongside a constitution , if it has one, or set of rules and other governing documents) .1
To avoid future misunderstandings or disputes, shareholders in a joint Water Organisation are advised to agree a Shareholders' Agreement ("SHA") in advance to govern the relationship between shareholders and the Water Organisation, and between the shareholders themselves. | | | --- | --- | | WHO IS THIS
TEMPLATE FOR?
The SHA is a contract between multiple shareholders of a Water Organisation setting out each shareholder's rights and obligations in respect of that Water Organisation. The parties may be councils and / or trustees of a consumer trust (established in accordance with section 50 of the Act) , as applicable.
If the shareholders agree, the Shareholders Council Terms of Reference template attached to the SHA will establish a Shareholder Council as a mechanism for shareholders to agree how they exercise their shareholder rights and powers in respect of the Water Organisation and to provide delegated governance oversight of the Water Organisation. | | | PURPOSE OF THIS DOCUMENT / TEMPLATE | The purpose of this document is to set out the rights and obligations of each shareholding council (and/or the trustees of any shareholding consumer trust) , and the rights and obligations of the Water Organisation itself, in relation to how the Water Organisation will be governed and decision-making at shareholder and Board levels will be managed.
In particular, this SHA sets out how shares will be allocated between shareholders and how shareholders will:
• make decisions on Reserved Matters as shareholders of the Water Organisation;
• provide loans and guarantees (if agreed);
• deliver their statutory commitments , including preparing the Statement of Expectations to the Water Organisation and ensuring that the business of the Water Organisation is conducted in accordance with it;
• provide for any future share issue;
• deal with any disagreements between shareholders , or defaults by a shareholder; and
• deal with general miscellaneous matters. | 1 Section 44 of the Local Government (Water Services) Act 2025 , and the definition of foundation documents in section 4. | To provide a further level of clarity, and streamline future decision-making, shareholders can choose to delegate oversight and decision-making in respect of the Water Organisation to a Shareholder Council.
The SHA anticipates each Council appointing an agreed number of members to the Shareholder Council which will itself then appoint a Chair and Deputy Chair under the Terms of Reference.
Without a Shareholder Council, the shareholders will each undertake their own governance oversight and decision-making in respect of the Water Organisation. | | --- | | KEY CONSIDERATIONS FOR COUNCILS
Before agreeing and signing this SHA, Councils should have undertaken consultation in respect of the decision whether to become a shareholder in the Water Organisation.
Once the SHA is agreed, Councils should establish the Water Organisation , including completing and adopting the Water Organisation Constitution, and sign this SHA2.
Councils can then agree and sign a Transfer Agreement with the Water Organisation. | How to use this document / template Complete the SHA with the required information e.g. names of signatory councils. Councils will have to make decisions on the following key issues to complete this template: | DECISIONS | | | ---

FAQs

Who is the Shareholders' Agreement (SHA) template for?

It is for councils and/or trustees of a consumer trust that are multiple shareholders of a Water Organisation. The SHA sets out each shareholder’s rights and obligations regarding that Water Organisation.

What does the SHA template cover in terms of governance and decisions?

It covers how shares are allocated, how shareholders make decisions on Reserved Matters, and how shareholder and Board-level decision-making will be managed. It also addresses loans and guarantees (if agreed) and other miscellaneous matters.

Can oversight be delegated to a Shareholder Council?

Yes. Shareholders can delegate oversight and decision-making to a Shareholder Council, which is then established under attached Terms of Reference, including appointing a Chair and Deputy Chair.

Sep 16, 2026

Upload by Logic