Evolution Of The Shareholders' Agreement in Canada

Business corporations statutes in most Canadian jurisdictions allow the shareholders of a corporation to restrict, in whole or in part, the powers of the directors of the Corporation to manage, or supervise the management of, the business and affairs of the corporation. A typical shareholders’ agreement will deal with any number of governance issues, including: (i) special approval requirements for certain important actions the corporation may want to undertake; (ii) the nomination of directors; (iii) the issuance of new shares or the sale/transfer of existing shares; and (iv) the right to receive information regarding the corporation and its business.

A shareholders’ agreement is a critical governance tool for any private corporation with more than one shareholder. This is particularly true in situations when a corporation is evolving from being a closely-held/family enterprise to a growing enterprise raising capital from unrelated, third-party investors. Absent