LEGAL COUNSEL FOR SHAREHOLDERS AGREEMENTS
Shareholders agreements are absolutely essential to the long term success of any corporate enterprise that is owned by more than one individual. Yet, it is highly unfortunate that far too many companies either fail to have a unanimous shareholders agreement or have an agreement that is inadequate its ability to carry-out the shareholders' true intent. For a shareholders agreement needs to properly reflect the shareholders' current collective intention for the company's operations and exit strategies. Without such coherence in this legal document, the corporation will find itself facing significant legal turmoil in the future as most attempt to overcome the agreement's deficiencies, will creating unnecessary tension and animosity amongst the shareholders, in an often futile and costly effort to achieve some form of resolution, with which no one is almost ever happy with.
As such, it makes sense to retain experienced legal counsel and properly negotiated and execute your company's shareholders' agreement such that it conforms to your requirements, or is otherwise acceptable in light of what has been bargained for with your fellow shareholders and other parties having a stake in your business enterprise.
At Neufeld Legal P.C., we assist corporate shareholders in making the appropriate decisions with respect to the drafting and implementation of unanimous shareholders agreements. Contact us at by telephone at 416-887-9702 (Toronto area) / 403-400-4092 (Calgary) or via email at Chris@NeufeldLegal.com.
Unanimous shareholder agreement
146(1) A unanimous shareholder agreement may provide for any or all of the following:
(a) the regulation of the rights and liabilities of the shareholders, as shareholders, among themselves or between themselves and any other party to the agreement;
(b) the regulation of the election of directors;
(c) the management of the business and affairs of the corporation, including the restriction or abrogation, in whole or in part, of the powers of the directors;
(d) any other matter that may be contained in a unanimous shareholder agreement pursuant to any other provision of this Act.
(2) If a unanimous shareholder agreement is in effect at the time a share is issued by a corporation to a person other than an existing shareholder,
(a) that person is deemed to be a party to the agreement whether or not the person had actual knowledge of it when the share certificate was issued,
(b) the issue of the share certificate does not operate to terminate the agreement, and
(c) if that person is a bona fide purchaser without actual knowledge of the unanimous shareholder agreement, that person may rescind the contract under which the shares were acquired by giving a notice to that effect to the corporation within a reasonable time after the person receives actual knowledge of the unanimous shareholder agreement.
(3) If a unanimous shareholder agreement is in effect when a person who is not a party to the agreement acquires a share of a corporation, other than under subsection (2),
(a) the person who acquired the share is deemed to be a party to the agreement whether or not the person had actual knowledge of it when the person acquired the share, and
(b) neither the acquisition of the share nor the registration of that person as a shareholder operates to terminate the agreement.
(a) a person referred to in subsection (3) is a protected purchaser as defined in the Securities Transfer Act and did not have actual knowledge of the unanimous shareholder agreement, and
(b) the person’s transferor’s share certificate did not contain a reference to the unanimous shareholder agreement,
that person may, within 30 days after the person acquires actual knowledge of the existence of the agreement, send to the corporation a notice of objection to the agreement.
(5) If a person sends a notice of objection under subsection (4),
(a) the person is entitled to be paid by the corporation the fair value of the shares held by the person, determined as of the close of business on the day on which the person became a shareholder, and
(b) section 191(4) and (6) to (20) apply, with the necessary changes, as if the notice of objection under subsection (4) were a written objection sent to the corporation under section 191(5).
(6) A transferee who is entitled to be paid the fair value of the transferee’s shares under subsection (5) also has the right to recover from the transferor by action the amount by which the value of the consideration paid for the transferee’s shares exceeds the fair value of those shares.
(7) A shareholder who is a party or is deemed to be a party to a unanimous shareholder agreement has all the rights, powers and duties and incurs all the liabilities of a director of the corporation to which the agreement relates to the extent that the agreement restricts the powers of the directors to manage the business and affairs of the corporation, and the directors are thereby relieved of their duties and liabilities, including any liabilities under section 119 or any other enactment, to the same extent.
(8) A unanimous shareholder agreement may not be amended without the written consent of all those who are shareholders at the effective date of the amendment.
(9) A unanimous shareholder agreement may exclude the application to the agreement of all but not part of this section.