Unanimous Shareholder Agreement Cbca

  • Post author:
  • Post category:Uncategorized

If you are a business owner in Canada, you may have heard about the importance of having a unanimous shareholder agreement (USA) under the Canada Business Corporations Act (CBCA). A USA is a contract between all shareholders of a corporation that outlines their rights, responsibilities, and obligations.

Under the CBCA, a USA is not mandatory, but it is highly recommended as it can provide added protection for shareholders and help avoid potential disputes. In this article, we will discuss the benefits of a unanimous shareholder agreement under the CBCA and what it should include.

Benefits of a Unanimous Shareholder Agreement

1. Protection for Minority Shareholders

A USA can provide protection for minority shareholders by establishing provisions for the sale of shares in case of a dispute or disagreement. This can help prevent situations where a minority shareholder may be forced to sell their shares at a lower price than they are worth.

2. Control of Business Operations

A USA can also outline the decision-making process for important business decisions such as mergers, acquisitions, and changes in the corporation’s structure. This can help ensure that all shareholders have a say in these decisions and can prevent any one shareholder from having too much control.

3. Resolution of Disputes

If a dispute arises among shareholders, a USA can provide a process for resolving the issue. This can help avoid costly and time-consuming legal battles and ensure that disputes are resolved fairly.

What Should a Unanimous Shareholder Agreement Include?

A USA under the CBCA should include the following provisions:

1. Share Transfer Restrictions

The agreement should outline restrictions on the transfer of shares and the process for selling shares. This can include the right of first refusal for existing shareholders and limitations on the sale of shares to third parties.

2. Decision-Making Process

The agreement should establish a decision-making process for important business decisions. This can include requiring a certain number of votes or a unanimous decision for certain decisions.

3. Dispute Resolution Process

The agreement should outline a process for resolving disputes among shareholders. This can include mediation or arbitration and should be fair and impartial.

4. Shareholder Rights and Obligations

The agreement should outline the rights and obligations of each shareholder. This can include obligations to contribute capital, an obligation to attend meetings, and the right to receive dividends.

Conclusion

In conclusion, having a unanimous shareholder agreement under the Canada Business Corporations Act can provide added protection for shareholders and help avoid potential disputes. The agreement should include provisions for share transfer restrictions, the decision-making process, dispute resolution, and shareholder rights and obligations. If you are a business owner in Canada, it is essential to consider a USA to ensure the smooth operation and success of your corporation.