Golden Law Office can meet with you and assist with the preparation of a Shareholder Agreement.
A corporation is owned by its shareholders. There is no legal requirement that there be a shareholder agreement. A shareholder agreement is an agreement between shareholders of a corporation that can address issues that may arise between the parties. Some of the issues that can be addressed by a shareholder agreement are:
- Governance of the corporation and how to resolve deadlocks;
- Any special rights offered to minority shareholders;
- Provide how the corporation is to be financed and shareholder obligations
- Anticipate future events such as the death of a shareholder, or how a shareholder may sell his shares.
If a corporation has more than one shareholder, it is recommended that a Shareholders’ Agreement be entered into in order to regulate governance, including resolution of deadlocks.
The agreement is used to plan for the future by having the shareholders agree at the start of their business relationship the rules to govern their relationship in varying circumstances. It can provide for an orderly transition on the withdrawal of a shareholder for any reason (be it death, retirement, disability, insolvency, breach of contract). The agreement would define the rights and responsibilities of the various shareholders, set out guidelines for the administration of the company, determine the events which would trigger a buy-out and provide for liquidity.
Funding the Share Purchase
In order to fund the purchase of shares of a deceased shareholder, life insurance is often obtained. The advantage of using life insurance proceeds is that it ensures that funds will be available for payment to the estate. The funding is not dependent on the financial strength of the surviving shareholder.
Each shareholder and the corporation should obtain have independent legal representation or obtain independent legal advice before entering into the agreement.
At Golden Law Office, Peggy Golden would meet with the shareholders of the corporation and learn as much as possible about the client’s objectives and needs in order to draft an agreement that is truly reflective of the wishes of the shareholders.
Call us now on or simply click here and fill out our easy contact form to get more information about how we can help you with all legal matters concerning shares and agreements.