Shareholder Agreement Lawyer Service
Shareholder Agreement Lawyer
Shareholder Agreement Preparation
Whether you are an entrepreneur, startup, or an established company, our business lawyer and corporate lawyer can assist you with drafting a shareholder agreement for your company.
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What is a Shareholder Agreement?
A shareholder agreement is a contract between a corporation's shareholders. A shareholder agreement can also include parties other than shareholders, such as the corporation at hand. Shareholder agreements cover a variety of topics, including a shareholder's rights and obligations.
Usually, rights and obligations are governed by a corporation's articles of incorporation, by-laws, and the corporation's governing statute. However, shareholders and/or a corporation often desire to modify existing rights and obligations by implementing specific contractual provisions into a shareholder agreement.
Private company shareholder agreements tend to include provisions restricting directors' powers, share transfer restrictions, as well as other provisions relating to triggering events impacting the corporation, such as a shareholder's departure.
Unanimous Shareholder Agreement
A unanimous shareholder agreement ("USA") is defined under the Business Corporations Act (Ontario) as follows:
A written agreement among all the shareholders of a corporation or among all the shareholders and one or more persons who are not shareholders may restrict in whole or in part the powers of the directors to manage or supervise the management of the business and affairs of the corporation.
Similarly, a unanimous shareholder agreement is defined under the Canada Business Corporations Act as follows:
An otherwise lawful written agreement among all the shareholders of a corporation, or among all the shareholders and one or more persons who are not shareholders, that restricts, in whole or in part, the powers of the directors to manage, or supervise the management of, the business and affairs of the corporation is valid.
A unanimous shareholder agreement binds future shareholders and signatories and gives the restricted powers to the directors of the corporation.
Shareholder Agreement Topics
A unanimous shareholder agreement tends to cover the following topics:
Typically, a shareholder agreement covers the appointment of officers and directors. However, sometimes shareholders desire more control over the operation of the corporation. This can be achieved by placing a provisions in the shareholder agreement that remove some powers from the directors. Sometimes removal of director powers can increase a shareholder's liability due to their active role in the corporation's activities.
Some shareholder agreements cover quorum and similar items. However, this is not always needed, since the Business Corporations Act (Ontario) and the Canada Business Corporations Act cover these items.
Participatory rights tend to speak to the rights of shareholders with respect to the issuance of new shares and the sale of shares by majority and minority shareholders.
Share Transfer Restrictions
To ensure that shares are not transferred in violation of securities laws and to ensure shareholders do not obfuscate share transfer restrictions in the articles of incorporation, a provision can be added to ensure share transfers only occur in certain circumstances.
A shareholder agreement can have a provision that speaks to procedure when it comes to a dispute between shareholders or a dispute between shareholders and the corporation.