Shareholder Agreement Checklist Canada

A shareholder pact provides a roadmap for the company`s life cycle from start to finish. It can reduce costs and uncertainties in the event of a « business resolution » or litigation. Each company is different and therefore any shareholder or partner relationship. The directors and the board of directors of the company are generally responsible for the day-to-day management of the company. Their rights and obligations are generally governed by the Constitution, with some important decisions being referred to shareholders in accordance with the shareholders™ pact. The critical need for such agreements to protect your interests becomes very clear if: You should use a shareholder contract if you are forging a business relationship with other parties based on the ownership of shares of a company. In a shareholders` pact, you can appoint shareholders, directors and officers of the company. Minority Tag Along Rights – Will minority shareholders be able to force a buyer of the shares of the majority shareholders to buy their shares as well? This provision gives the minority shareholder (s) the opportunity to decide whether to engage with the new majority shareholder. In this article, I summarized many of the most common issues that shareholders should consider before negotiating a shareholders` pact. Our team ensures that your shareholders` pact is tailored to your company`s needs and protects your investments and personal interests in an adequate way. Our audits will identify gaps in compliance and modern governance agreements and ensure that decision-making responsibility is effectively distributed within your board of directors, business owners, shareholders and investors. As is clear from the above, there are many reflections that inform the negotiation and development of a shareholder contract.

Most shareholder disputes can be resolved or avoided completely with a good shareholders` pact – but a poorly crafted shareholder pact can create confusion and unintended results of litigation and have the opposite effect. There is no quick and simple solution, but I urge shareholders to seek the services of an experienced corporate lawyer to help prepare a shareholder pact.