Pawlina Law

Shareholder Agreements

Unanimous shareholder agreements are very common in the case of small corporations that have only a few shareholder-members as they provide certainty in how the corporation will conduct its affairs. Shareholder agreements often form a critical element in the overall documentation of the business relationships between the incorporators and other persons (such as investors) participating in some capacity in the incorporation of a company. A shareholders agreement usually deals with the following subject matter:

  • Procedural matters
  • How and by whom the Corporation will be Managed
  • Promises of the corporation
  • How shareholders and the corporation will deal with current and future shares
  • Provisions for the resolution of any future disputes between shareholders
  • The location of the business in which the corporation is to engage
  • The contributions that each shareholder is expected to make to the business
  • Withdrawal from membership
  • Buy-sell (shotgun or buyout) provisions
  • Pre-emptive rights to acquire the shares of a departing member of the corporation
  • Addition of new shareholders
  • Restrictions on changing of the business of the corporation
  • Provisions dealing with subscription for share capital and the provision of know-how or other intellectual property to the corporation by its incorporators; and
  • Even such matters as the death, divorce, bankruptcy or retirement of one of the shareholders.

It is important to consult closely with each relevant shareholder interest, to ensure that the provisions of the agreement that is put into place are fully consistent with their aims and objectives. Shareholder Agreements are usually complicated. Since we focus on corporate law, Pawlina Law can assist you with drafting, negotiating and reviewing a Shareholder Agreement. Please do not hesitate to contact us.