Shareholder Agreement

A Shareholder Agreement is a document between a corporation and its shareholders. In a Shareholder Agreement, the corporation and the shareholders agree to the bounds of the relationship between them.

The aim of the shareholders agreement is to provide clarity on certain key matters that affect shareholders such as what rights they have as shareholder, when they need to be consulted by the directors on decisions affecting the company, and under what circumstances can they transfer their shares to a different person.

What it includes:

  • Purpose and scope of the agreement
  • Vesting option
  • Financial participation information
  • Structure of the corporation (board of directors, meetings, exit provisions, etc.)
  • Information rights
  • Share rights
  • Sale rights
  • Disposition of shares
  • Confidentiality
  • Dispute resolution


Once you have filled in the appropriate information, your Shareholder Agreement will be generated and sent to you via email.

Frequently Asked Questions

A shareholders’ agreement is a contract that outlines the rights and obligations of each shareholder, as well as the regulations being used to run a corporation . “Its purpose is to protect the shareholder’s investment in the company, to establish a fair relationship between the shareholders and govern how the company is run”.

A unanimous shareholder agreement is defined by the Canada Business Corporations Act (CBCA) as an agreement among all shareholders “that restricts the powers of the directors to manage, or supervise the management of, the business and affairs of the corporation”.

A properly drafted shareholders’ agreement may help to mitigate risk in the future and ensures that both the interests of the corporation and the shareholders are well protected.

Considering that a shareholders’ agreement is a legally binding contract, it can be beneficial for shareholders to seek the assistance of a lawyer to draft the agreement and identify potential issues a shareholder may face along with possible solutions.

Below is a list of 14 sections that can be included when drafting a shareholders’ agreement:

  1. Preamble: Identify the Parties
  2. Recitals: Set the context
  3. Interpretation and Definitions
  4. Board of Directors, Governance, Management, and Operation
  5. Information Rights
  6. Dividends
  7. Share Ownership
  8. Share Transfer Provisions
  9. New Shareholders
  10. Voting
  11. Pre-Emptive Rights
  12. Purchase Price/Valuation of Shares
  13. Conflict of Interest, Confidentiality, and Non-Competition
  14. Term and Termination of Agreement, Dispute Resolution, and Governing Laws.

Drag-along rights obligate the minority shareholder to sell their shares along with the majority shareholder in a sale to a third party in order to protect the majority interest . The majority shareholder is obligated to provide the minority shareholder the same price and terms as other sellers .

Tag-Along Rights protect minority shareholders in the sale of shares. If a majority shareholder decides to sell their shares, a minority shareholder has the right to join the transaction . Majority shareholders are obligated to include the shares of the minority shareholder on a pro rata basis on the same terms .

Corporations should outline certain restrictions on how and when it is appropriate for shareholders to sell their shares such as when consent is obtained, a transfer notice is received, an insolvency occurs, etc. The share transfer provisions of the shareholders’ agreement outline such restrictions, define permitted transfers, and encapsulate certain rights of other shareholders including, for example, a right of first offer, right of first refusal, tag-along and drag-along rights, and buy-sell provisions.