Protecting Your Company With A USA
Plan your company’s future with a unanimous shareholder agreement. They are an agreement between the shareholders (owners) of the company. Anyone who buys into the company has to agree to the terms of the unanimous shareholder agreement. Unanimous shareholder agreements are important to have early in the corporation’s life.At Kahane Law Office we think you should start your business off one the right foot for success. In Calgary, Alberta call 403-225-8810 to learn more.
Why Have a Unanimous Shareholder Agreement?
Our unanimous shareholder agreement lawyers help shareholders plan for the future. We set down how the corporate entity will function. This may prevent shareholder disputes 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 a Unanimous Shareholder Agreement Does
As the name suggests, a unanimous shareholder agreement must be agreed to by all the corporate shareholders. It can spell out the rights and obligations of each shareholder, including management issues and share transfer provisions. While the choice is yours, there are some terms that every unanimous shareholder agreement should have. The Supreme Court of Canada has described 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”¦”
A unanimous shareholder agreement lawyers helps put expectations for shareholders in the open. It allows these discussions early in the development of the corporation. It can be an effective and efficient way for minority shareholders to become involved in the organization and management of a corporation. A unanimous shareholder agreement can also provide great flexibility for shareholders to decide how the corporation will be structured and run.
Issues the unanimous shareholder agreement can address
Unanimous shareholder agreement lawyers draft provisions that cover the following, and more, issues:
- Who are the parties (voting and non-voting shareholders)?
- What decisions will need unanimous shareholder approval?
- Will the issuance of shares be restricted? If so, how?
- What mechanism will shareholders use to vote their shares?
- How shareholders to sell or transfer their shares?
- How will the shares of working shareholders be treated if and when they become inactive?
- What mechanisms will be used to resolve shareholder disputes?
- How will the agreement be terminated?
- Can the corporation be dissolved if a shareholder claims the agreement has been breached?
- 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. 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 can be costly. 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 may also help avoid costly litigation or arbitration. Duties, responsibilities, rights, obligations and mechanisms setting out how things need to get done or how disputes can be resolved can be spelled out and create 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 can be resolved amicably. 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. We look forward to your call, and hope that we will be able to help you, as we have helped our other clients.