Shareholder Agreement Checklist Ontario: Everything You Need to Know
A shareholder agreement is a crucial document for any corporation, as it outlines the rights and responsibilities of each shareholder. In Ontario, this agreement is legally binding, making it essential to ensure that it`s created with precision and accuracy. Here is a checklist to help you create the perfect shareholder agreement as per Ontario law.
1. Identify the Shareholders
List out the names and addresses of all shareholders, and include their percentage of ownership. Make sure that this information is accurate, as it is vital for the agreement`s validity.
2. Specify the Purpose of the Corporation
Define the purpose of the corporation as per the Ontario Business Corporations Act (OBCA). This includes outlining the products and services that the company offers and its target market.
3. Determine the Board of Directors
Outline the procedures for choosing and removing directors, as well as their roles and responsibilities. This section should also specify the voting procedures and quorum requirements for board meetings.
4. Clarify Shareholder Powers
Outline the powers of each shareholder, which could include veto power over certain decisions or the right to call a meeting. This section should also outline the procedures for making major decisions, such as mergers and acquisitions.
5. Define Share Transfers
Specify the procedure for transferring shares, including the right of first refusal for existing shareholders.
6. Outline Shareholder Rights
This section should outline the rights of each shareholder, including the right to receive dividends and vote on major decisions.
7. Address Shareholder Disputes
Outline the process for resolving disputes between shareholders, such as mediation, arbitration, or litigation.
8. Specify Confidentiality
Ensure that all shareholders agree to maintain confidentiality regarding the corporation`s operations and financial information.
9. Detail Termination Procedures
Outline the procedures for dissolving the corporation or terminating the shareholder agreement.
10. Seek Legal Assistance
It`s essential to seek legal assistance when drafting a shareholder agreement, as it`s a legally binding document. A lawyer experienced in corporate law and shareholder agreements can guide you through Ontario`s regulations and requirements.
A shareholder agreement is a vital document for any corporation, including those incorporated in Ontario. Ensure that your agreement covers all the necessary topics and that it aligns with Ontario laws and regulations. Use this checklist as a guide to create a comprehensive and legally binding shareholder agreement.