Shareholder Agreement with Put Option | Canada

Picture of Shareholder Agreement with Put Option | Canada Picture of Shareholder Agreement with Put Option | Canada Picture of Shareholder Agreement with Put Option | Canada

A Shareholder Agreement protects the interests of a corporation's shareholders and minimizes the risks of share ownership. This Canadian template contains a buy-sell or "put" option.

  • This is a Canadian legal form which can be used anywhere in Canada except Quebec.
  • The Shareholder Agreement establishes the obligations of the shareholders and the corporation to each other, and sets out any restrictions on share transfers or the issue of new shares.
  • The remaining shareholders have a right of first refusal to acquire the shares of a departing shareholder, before the shares can be offered to a third party.
  • A departing shareholder also has a buy-sell or 'put' option, which would require the remaining shareholders to purchase his/her shares. The put option is available only after the departing shareholder has been unsuccessful in finding a third party purchaser for a period of 6 months.
  • The template contains buy-sell options for both an assured buy-out and a mandatory or 'shotgun' buy-sell.
  • If a shareholder dies, the surviving shareholders have the option to buy the deceased shareholder's shares, failing which they must be purchased by the corporation.
  • The Shareholder Agreement can serve to avoid unnecessary conflict by having the owners agree on management issues and exit strategies at the outset.
Document Type: Microsoft Word
Last Updated: 25-October-2024
SKU: 34
$29.99
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Discover the legal and practical issues you need to consider when entering into a shareholder agreement with this Shareholder Agreement Guide and Checklist for Canadian companies.

  • Topics in the Guide include:
    • how to avoid misunderstandings between shareholders;
    • distribution of profits;
    • decision-making;
    • exit strategies;
    • employee shareholders;
    • default by a shareholder;
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Would your business survive the death or retirement of one of the owners? Provide for the continued existence of the business with this Canada Shareholder Buy-Sell Agreement (Corporate Redemption Method).

  • The corporation obtains life insurance policies on each of the shareholders and uses the proceeds to fund the redemption, acquisition or cancellation of the corporation's shares.
  • Upon the death of a shareholder, the corporation redeems the deceased shareholder's shares and makes an election that the deemed dividend is to be paid from the capital dividend account to the extent possible.
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Picture of Shareholder Buy-Sell Agreement - Hybrid Method | Canada

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The Canada Shareholder Buy-Sell Agreement (Hybrid Method) is an option that Canadians can consider to put a succession plan in place for the continuity of their small business.

  • This type of buy-sell agreement is known as a 'hybrid' buy-sell.
  • Under this Agreement, the corporation holds life insurance policies on each of the shareholders.
  • Upon a shareholder's death, the corporation will collect the insurance proceeds, and use the proceeds to fund the purchase of the deceased shareholder's shares by any of the surviving shareholders who are interested, on a pro rata basis (proportional to their existing shareholdings).
  • Any unpurchased shares will be redeemed by the corporation.
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Picture of Shareholder Buy-Sell Agreement (Promissory Note Method) | Canada

Shareholder Buy-Sell Agreement (Promissory Note Method) | Canada

Plan ahead for the continuation of your business upon the death or retirement of an owner with this Shareholder Buy-Sell Agreement (Promissory Note Method) for Canadian companies.

  • The corporation will hold life insurance policies on each of the shareholders and use the proceeds to redeem and acquire its own shares from a deceased shareholder's estate.
  • If a shareholder dies, the surviving shareholders can purchase the deceased's shares on a pro rata basis (proportionate to their current shareholdings) by issuing the corporation a promissory note for the purchase price.
  • The corporation will loan the purchaser the amount of the purchase price from the insurance proceeds, and then makes an election for a deemed dividend to be paid from the capital dividend account if possible.
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Research the issues you need to consider when preparing a shareholder agreement for your company with this Shareholder Agreement Checklist, which covers:

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Discover the legal and practical issues you need to consider when entering into a shareholder agreement with this Shareholder Agreement Guide and Checklist for Canadian companies.

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