The contents of a Shareholders’ Agreement

As we discussed in our last blog post, incorporated businesses in Canada must create a Shareholders’ Agreement to protect their shareholders and avoid disputes.  Here are the typical contents of a Shareholders’ Agreement:

  • Company structure
  • Division of equity among shareholders
  • Parties in the agreement
  • Officers and directors of the corporation
  • Right of first refusal and pre-emptive rights to acquire shares
  • Buy-out provisions for voluntary/involuntary withdrawal of shareholders
  • Option to purchase on death/disability of shareholder
  • Restrictions on transfer of shares
  • Key decision-making processes
  • Dispute resolution
  • Shareholder rights, obligations and commitment
  • Management contracts or key-person agreements
  • Ongoing shareholder financial obligations
  • Compensation issues
  • Company’s professional advisors
  • Provisions for termination of the agreement
  • Shotgun clause
  • Share valuation and business valuation
  • Insurance requirements

Tune in next week when we talk about the perks and snags of incorporated businesses!

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