shareholders' rights and obligations in alberta

Shareholders Agreement

A good shareholders’ agreement safeguards the company, its shareholders, and its management. It outlines how to operate the business and balances shareholders’ rights and duties. With so much at stake, any corporation with more than one shareholder must have a well-drafted shareholders agreement in place. A lawyer can help to ensure that the agreement is fair, equitable, and legally binding for all parties involved.

A shareholders’ agreement is an arrangement that describes how to run a corporation and protect the interests of the shareholders and the business. It often contains provisions regarding fair dealings with minority stakeholders, the appointment of directors, and accepting new shareholders. At DLegal, we help you create appropriate checks and balances and effective mechanisms for resolving problems between shareholders in light of the company’s best interests.

Shareholders are one of the most critical stakeholders in a company as they provide the capital essential for businesses to grow and expand. Without shareholders, many businesses would struggle to survive. Therefore, it is in companies’ best interests to keep their shareholders happy.¬†However, it is also important to preserve the interests of the corporation to make sure it operates successfully in the interests of its staff, public, and other stakeholders.

Having a shareholders agreement in place can help to avoid disputes between shareholders, make it easier to run the business, and prevent and circumvent conflicts. However, no two shareholders agreements are made equal. Therefore, it is crucial to consult an attorney to craft your shareholder’s agreement or review it before signing it.

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Shareholders Agreement

A shareholders agreement is a contract between the shareholders of a company or the shareholders and the company that outlines their rights and obligations. The agreement may also specify how the shares will be transferred if a shareholder dies or wants to sell their shares. While not required by law, a shareholders agreement can help to prevent disagreements and protect the interests of all parties involved.

For example, some agreements may give certain shareholders preferential treatment in terms of voting rights or dividends. Others may give all shareholders equal rights. Once the terms of the agreement are finalized, all parties should sign the document to make it legally binding. By doing so, they can help to ensure that everyone is on the same page and that their interests are protected.

Key Sections in a Shareholders Agreement

It is of the utmost importance that your shareholder agreement is thorough and meets the needs of your corporation. Not all shareholder agreements are the same. However, there are some similarities between agreements. You may want to add the following sections to your agreement.

The rights and duties of shareholders

This section sets out what each shareholder is entitled to, as well as their duties to the company. For example, it may state that shareholders have the right to vote on important decisions or that they must not disclose confidential information.

The board of directors

The board of directors is responsible for making decisions on behalf of the shareholders. This section sets out who will sit on the board, how often they meet, and how decisions will be made.

The management of the company

This section sets out who will be responsible for running the company’s day-to-day operations. It may also set out how decisions are made and what authority the managers have.

Capital contributions

This section sets out how much each shareholder has invested in the company, and whether they are entitled to receive any interest or dividends on their investment.

Restrictions on transfers of shares

This section sets out whether shareholders are allowed to sell or transfer their shares, and if so, what restrictions apply. For example, it may state that shares can only be transferred with the approval of the board of directors.

Dispute resolution

This section sets out how disputes between shareholders will be resolved. For example, it may state that disputes must be referred to arbitration or mediation before they can go to court.

Unanimous Shareholder Agreements

A unanimous shareholders agreement is a type of shareholders agreement in which all the shareholders agree to be bound by its terms. The main advantage of a unanimous shareholders agreement is that it allows the shareholders to agree on a range of issues in advance, including how the company will be managed, what will happen if one shareholder wants to sell their shares, and what happens if the company is sold. This can help to avoid disputes between shareholders down the line.

Another advantage of a unanimous shareholders agreement is that it can help to protect the interests of minority shareholders. For example, suppose the majority shareholder wants to sell the company. In that case, the minority shareholders can use the unanimous shareholders agreement to block the sale. In contrast, a standard shareholders agreement may not have this provision, meaning that minority shareholders could be left vulnerable.

While unanimous shareholders agreements offer some distinct advantages, they can also be more challenging to implement, as all shareholders must reach a consensus on its terms. For this reason, it is important to seek legal advice before entering a shareholder agreement to ensure it is enforceable.

Who Needs a Shareholders Agreement?

No corporation is legally obligated to create a shareholders agreement. However, if you are planning to opt for one, it is best to seek legal advice to ensure that the agreement is valid and enforceable.

A shareholders’ agreement is vital for any business with more than one owner. It sets out the rights and obligations of the owners and how the company will be run. In addition, it can help prevent disagreements between owners and provide a framework for resolving them if they occur.

The agreement should be signed by all of the shareholders and should be reviewed and updated on a regular basis. If you are thinking of starting a business with one or more other shareholders, it is important to seek legal advice to ensure that all of your interests are protected.

Ensuring Your Shareholders Agreement is Legally Enforceable

While the Business Corporations Act governs shareholders’ agreements of Alberta corporations, Canada Business Corporations Act handles shareholders agreements for federal corporations. Regardless of these differences in governing statute and jurisdiction, there are specific rules of thumb to consider.

To be legally binding, a shareholders’ agreement must be in writing and signed by all the shareholders. For extra protection, it is recommended that a witness be present to sign as one. It is also advisable to have the agreement reviewed by a lawyer to ensure it serves your interests.

Once the agreement is duly executed, it cannot be changed without the consent of all the shareholders. If one of the shareholders dies or leaves the company, their shares will usually be transferred to the other shareholders in accordance with the provisions of the agreement.

Shareholder Agreement Lawyer

Shareholder agreements are essential tools to promote growth and handle risks for your corporation regardless of its size. While it is possible to draft a shareholder agreement on your own, it is highly recommended that you seek the advice of a lawyer. Using a lawyer to draft a shareholder agreement is the best way to protect your interests and ensure the future success of your business.

At DLegal, our lawyers can help to ensure that your agreement is legally binding and that all relevant issues are addressed. In addition, we can provide valuable guidance on drafting an agreement that meets the specific needs of your business. We offer customized legal services at affordable rates and help you succeed without compromising your budget.

Shareholder Agreements in Alberta

Shareholders Agreement


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