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Shareholder Agreements – Part Seven

Shareholder Agreements: 7) Death of a shareholder The death of a shareholder can paralyze a company that has not prepared for it. Surviving shareholders will likely not want to be in business with the heirs of the dead shareholder, as they may not have the necessary experience or interest, or simply may not be compatible [...]

Located in: Corporate and Commercial Law

Shareholder Agreements – Part Six

Shareholder Agreements: 6) Defaulting shareholders A shareholder agreement can provide remedies in the event that a shareholder defaults in his or her obligations to the company, or if the circumstances of a shareholder change fundamentally. For example, if a shareholder quits his or her job with the company, goes bankrupt, or becomes physically or mentally [...]

Located in: Corporate and Commercial Law

Shareholder Agreements – Part Five

Shareholder Agreements: 5) Shotgun clause A simple and effective way to facilitate a buy out is to add a “shotgun clause” to an agreement. Under a shotgun clause, one shareholder offers to buy the other shareholder’s shares. The other shareholder can either accept the offer or buy out the offeror’s shares on the same terms. [...]

Located in: Corporate and Commercial Law

Shareholder Agreements – Part Four

Shareholder Agreements: 4) Restrictions on Share Transfer Shareholders generally want some control over who the other shareholders will be. At the same time, this expectation needs to be balanced with allowing shareholders to leave the company when they choose, and for a fair price. A shareholder agreement normally allows shareholders to sell to outsiders only [...]

Located in: Corporate and Commercial Law

Shareholder Agreements – Part Three

Shareholder Agreements: 3) Participation in management and protection of minority shareholders Without a shareholder agreement, a simple majority of the directors can decide on major decisions such as: • major capital expenditures; • borrowing or granting security for capital expenditures; • distributing profits; • remuneration of key employees; • contracts between the company and shareholders; [...]

Located in: Corporate and Commercial Law

Shareholder Agreements – Part One

If your company has more than one shareholder, you should have a shareholders agreement. While they can be costly and a pain to negotiate, they anticipate problems, prevent misunderstandings and generally pay for themselves many times over when difficulties arise. In this eight-part blog on shareholder agreements, we will cover areas such as financing, distribution [...]

Located in: Corporate and Commercial Law

When Should I Incorporate?

At some point, it may be worth incorporating your business.  Here’s what you’ll need to consider. 1.      Limited liability As a general rule, shareholders are not responsible for corporate debts. If a corporation goes bankrupt, its shareholders will lose no more than their investment (unless the shareholder has provided personal guarantees for the corporation’s debts). [...]

Located in: Real Estate Law