Shareholders Agreement Definition Canada

Shareholder agreements also define procedural tasks concerning the transaction. a shareholders` agreement may define the manner in which a meeting of the board of directors is to be convened; How often do such meetings take place; and quorum thresholds (note, however, that the quorum must not be less than the minimum legal requirements). The company`s articles of association and the shareholders` agreement should also be jointly reviewed to ensure that they are not contradictory. In a small business where a person may own more than 50% of the shares, a majority shareholder may be prevented from electing any director, simply because of their majority ownership. Depending on your jurisdiction, you may have certain options for determining the company`s directors. For example, shareholders could each appoint a director. Similarly, a pre-emption clause gives shareholders the right to acquire shares from another existing shareholder who wishes to transfer his shares to a third party. Before being able to sell his shares, the selling shareholder must first propose to the other shareholders of the company to sell these shares who are entitled to buy their proportionate share of the shares on the same conditions that the selling shareholder received from the third party for a limited period. A shotgun clause can be used to facilitate a shareholder`s exit from the company by allowing a shareholder to sell their shares to one or more existing shareholders on equal terms or to acquire shares from one or more existing shareholders. .

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