What is a Shareholders’ Agreement?

A shareholders’ agreement is an agreement between the owners, or shareholders, of a company that sets out how the company will conduct its business and sets out the terms of the relationship between the shareholders with respect to the company.

Some of the issues a shareholders’ agreement can address include:

• How the shareholders will financially contribute to the company;
• What the individual shareholders will be doing for the company on a day-to-day basis;
• How will profits be split;
• How a new shareholder can buy in to the company;
• What to do if a shareholder wants to sell their shares;
• How to prevent a shareholder from selling shares to someone you may not want to do business with;
• What to do if there is a death of a shareholder;
• What will happen in the event of a divorce of a shareholder.

The Benefits of a Shareholders’ Agreement

There are many benefits to having a shareholders’ agreement. By addressing potential issues in advance, the agreement can save shareholders thousands in future legal costs and the headache resulting from such conflicts. Further, you can outline how disputes are to be resolved in your agreement.

Other benefits of a shareholders’ agreement include:

• Protecting minority shareholders and their interests;
• Allowing shareholders to keep certain aspects of their agreement private because unlike some other corporate documents, they are not accessible by the public;

If you would like to discuss how a shareholders’ agreement may benefit your company, please give us a call at 604-449-7779 or fill out our contact form. We would be honoured to be of service.