September 14, 2016 Business Law
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.
Asking the question often provides the answer. When business owners consult us as to the necessity and usefulness of a shareholders’ agreement, we ask them the following questions:
A shareholers’ agreement will provide the answers to these questions as well as many others. It should be noted that the laws on corporations do not establish specific rules on the manner in which shareholders are to deal with each other, hence the need for a shareholders’ agreement. The agreement will prevent long and costly legal proceedings in the event of a conflict or impasse and will establish the rights and obligations of each shareholder in specific situations that are not provided for in the laws on corporations.
Ultimately, many elements must be taken into consideration in the drafting of a shareholders’ agreement, including taxes and estate planning. It is a fundamental agreement for which the content will vary according to the specific needs of the parties. Every business with more than one shareholder must have an agreement between its shareholders.
This bulletin provides general comments on recent developments in the law. It does not constitute and should not viewed as legal advice. No legal action should be taken on the basis of the information contained herein.Back to the list of publications - Business Law