Shareholder agreements are a class of contracts specifically related to the relationship between some or all of the shareholders of a corporation. Ontario’s Business Corporations Act authorizes shareholder agreements to handle written agreements between two or more shareholders intended to provide the manner in which voting rights attributable to the shares held by each party to such agreement shall be exercised.

The Business Law Group assists business owners, industrial manufactures and public service companies with shareholder agreements dealing with voting rights. We handle other shareholder agreements seeking to limit share transfers to transactions prescribed by the agreement and agreements giving shareholders with significant interest in the corporation approval rights for fundamental transactions.

The Business Law Group handles the triggering of shotgun clauses and other mechanisms to assume control or dispose of shares in a corporation. We work closely with businesses to help protect shareholder rights.

What is a Unanimous Shareholder Agreement?

A unanimous shareholder agreement is a written agreement among all the shareholders of a corporation that restricts, in whole or in part, the powers of the directors to manage the business and affairs of the corporation. We assist shareholders with challenging directors and their decisions.

What is Different about a Unanimous Shareholder Agreement?

A unanimous shareholder agreement is distinct from other types of shareholder arrangements. These types of agreements must be signed initially by all of a corporation’s shareholders. It is the only mechanism by which the powers of the directors can be restricted.

What is a Shotgun Clause?

Shotgun clauses are common in business relationships. These types of clauses provide a mechanism where any shareholder can attempt to sell their interest or acquire the shares of another shareholder.

With this type of clause in your shareholder agreement, the triggering shareholder fixes the price per share for a purchase of another shareholder’s shares, or for the sale of the triggering shareholder’s shares. The recipient shareholder of the offer can choose to buy the shares of the triggering shareholder or sell their own shares at the price fixed in the offer.

Shareholder agreements are very complex and should be carefully reviewed. There are a number of tax consequences associated with actions undertaken pursuant to a shareholder agreement.

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