Plan your company’s future with a unanimous shareholder agreement. They are agreements between all the shareholders (owners) of your company. In the future, anyone who agrees to buy into the company, also needs to agree to the terms of the unanimous shareholder agreement. Unanimous shareholder agreements are important to include early in the formation of the corporation. At Kahane Law Office we want all our clients to start their businesses off one the right foot for success. In Calgary, Alberta call 403-225-8810 to learn more.
Why Have Unanimous Shareholder Agreements?
Our unanimous shareholder agreement lawyers help shareholders plan for the future. The agreement details how the corporate entity functions along with the roles of each shareholder. In other words, this aims to prevent shareholder disputes in advance. Additionally, if they arise, the often prevent the dispute from ending up in court. A unanimous shareholder agreement may restrict, totally or in part, the powers of the corporation’s directors to manage, or supervise the management of the business. They cannot eliminate the board. Read our blog to help decide if a USA is right for your business.
What An Unanimous Shareholder Agreement Does
As the name suggests, each and every shareholders of the corporation must agree to the unanimous shareholder agreement. It spells out the rights and obligations of each shareholder. For example, this includes management issues and share transfer provisions. While the choice of the terms included in the agreement are up to the shareholders, some terms exist that every unanimous shareholder agreement should have. The Supreme Court of Canada describes the effect of a unanimous shareholder agreement as follows:
“Rather than removing the directors from their positions, a unanimous shareholder agreement simply relieves them of their powers, rights, duties, and associated responsibilities. This may be accomplished without specific formality; all that is required appears to be some unanimous written expression of shareholder will. The result, however, amounts to a fundamental change in the management of the company”.
Unanimous shareholder agreement lawyers help put expectations of the shareholders out in the open. It allows these discussions early in the development of the corporation. These agreements effectively and efficiently allow a way for minority shareholders to become involved in the organization and management of a corporation. An unanimous shareholder agreement also provides great flexibility for shareholders to decide how the structuring and running of the corporation occurs.
Issues The USA addresses
Unanimous shareholder agreement lawyers draft provisions that cover a wide range of issues. For example, agreements often deal with the following issues, and more:
Who are the parties (voting and non-voting shareholders)?
What decisions will need unanimous shareholder approval?
Will restrictions exist for the issuance of shares? If so, how?
What mechanism will shareholders use to vote their shares?
How shareholders to sell or transfer their shares?
How the shares of working shareholders are treated if and when they become inactive?
What permitted mechanisms resolve shareholder disputes?
What terminates the agreement.
Can the shareholders dissolve the corporation if a shareholder claims a breach of the agreement occurred? and lastly,
Will minority shareholders have any special rights? If so, what will they be?
With Rights Come Responsibilities
If the powers of the directors to manage the corporation are taken over by the shareholders, the Canada Business Corporations Act gives them the same rights, power, duties, and liabilities as a director of the corporation. Therefore, with these increased powers comes increased potential liabilities. The Act generally limits shareholders’ liability, however, if they take over for a board directors, then they take over the directors’ risk of potential personal liability for the corporation. Talk to our unanimous shareholder agreement lawyers to help understand more.
Costs And Benefits Of A Unanimous Shareholder Agreement
Our unanimous shareholder agreement lawyers try to keep costs down. We know starting a business often comes at a significant cost. As unanimous shareholder agreement lawyers, we offer flat rates on more standardized agreements. However, depending on the number of shareholders and how common their goals for the business and management styles, putting together a unanimous shareholder agreement could take substantial time, energy and cost. Negotiating the agreement is an opportunity for shareholders to learn about each other, their visions for the corporation, their tolerance for risk and style of management. Through these negotiations, you may become more energized and excited about the corporation and its future or may make you re-think whether becoming a shareholder is right for you.
These agreements often also help avoid costly litigation or arbitration. Duties, responsibilities, rights, obligations and mechanisms setting out how things need to get done or how to resolve disputes. The USA spells out and creates a road map for shareholders. If the agreement is thorough enough, well thought out and agreed to with fully informed consent, many issues between shareholders that could degenerate into litigation become resolvable in an amicable fashion. Lastly, call our unanimous shareholder agreement lawyers today to book an appointment.
Hiring Unanimous Shareholder Agreement Lawyers In Calgary
If you have any questions about creating a unanimous shareholder agreement, or need help with an existing one, contact our office. These agreements often save corporations when shareholders disagree on material issues. Our team looks forward to your call. We know that we have the ability to add value to you, your company and the other shareholders, as demonstrated by feedback from past clients.