Shareholders' Agreements

A shareholder agreement is a contract which defines the relationship between some or all of the shareholders of a corporation and with the corporation itself. It is in the best interest of those incorporating the business to create a shareholders' agreement at the outset as it is virtually impossible to successfully negotiate such an agreement once tensions and disputes have arisen between shareholders.

Shareholders agreements will vary in detail and complexity, depending on the particular business and shareholders/partners involved. There are a number of rights and obligations of shareholders which can be addressed within a shareholders' agreement. One of the purposes for a shareholders' agreement is to provide a mechanism for sale of the shareholder's interest in the corporation. It should provide a method for calculating the monetary value of each shareholder's interest in the corporation and an opportunity and mechanism for other shareholders to purchase that interest. The agreement should also contain rules or restrictions about the sale of one shareholder's interest to a person or corporation that the other shareholder deems undesirable. Additionally, the agreement can establish the roles and responsibilities of each member and how they will be compensated for their services.

These are just a few examples of the issues which need to be addressed in a shareholders' agreement. Consult one of our experienced corporate lawyers to obtain personalized advice on the structure and content of your shareholders' agreement.