Groupe Dupuis Paquin

Shareholders' agreements

The shareholders' agreement is a contract between shareholders of a company incorporated under either the Business Corporations Act of Quebec or under the Canada Business Corporations Act. The possibility of entering into such contracts is provided for in both Acts.

The shareholders' agreement is not mandatory, but it is strongly recommended by the community of corporate law practitioners. It will generally be adopted by companies owned by a small number of shareholders, especially when each stakeholder involved plays a key role in the company.

The objectives of such an agreement are many. They entail the administrative, operational and financing aspects of a company, the roles of shareholders, the rules relating to the proportion of equity between shareholders, etc. Clearly, corporate law provisions cannot go into a lot of detail about each company's business. Even the best agreements won't. However, they describe and define the "rules of the game", which will be known and accepted in advance by all shareholders.

This predictability provided by the shareholders' agreement avoids many false perceptions and misunderstandings that could result not only in financial and performance losses but also in ruined relationships. In fact, it is best to put in place such documents in times of harmony in order to nurture good relations between shareholders.

The shareholders' agreement is the contract that future partners should always enter into. That being said, once it has been signed, shareholders should forget about it and focus solely on the success of their business.

More often than not, the evolution of the company over time requires additions, modifications or adjustments to the Agreement. Provided that there is harmony, the contract may then be amended like any other agreement by mutual consent.

Here is a non-exhaustive overview of clauses that may be part of a shareholders' agreement: buy-sell provisions ("shotgun" or other types), transfer of shares upon retirement or death, pre-emptive rights, right of first refusal, mandatory offer, share valuation and payment, insurance, vote, responsibilities and duties of shareholders, administration and management of the company (need for a unanimous member agreement), etc.

In this practice area, our team meets your needs in several ways, including:

  • Helping to negotiate agreements;
  • Drafting agreements;
  • Dispute resolution between shareholders.