This column outlines the purpose of a shareholders’ agreement for a corporation’s shareholders. Specifically, this column highlights some very common and practical situations in which a shareholders’ agreement proves very useful.
Many business people consult us to evaluate the benefits of setting up a management corporation, commonly known as a holding company. First and foremost, a holding company allows for the transfer of surplus cash accumulated in the business (the operating company). This transfer is made through the payment of intercorporate dividends, which are generally exempt from taxes.
A trust is an independent patrimony created by a settlor and managed by one or several trustees for the benefit of the beneficiaries. The beneficiaries have no right of ownership over the property held in trust, which is instead within the trust’s separate patrimony. There are several types of trusts, but this article will focus on the discretionary family trust.
The non-competition clause seeks to protect a business against potential competition from a key person, such as an important employee, a shareholder, or a seller who sells his business’ shares, following said person’s departure from the business.