OBCA Amended To Make Unanimous Shareholder Agreements Binding On Purchasers Without Notice

However, such purchasers will now enjoy a right of rescission, thanks to recent amendments to Ontario’s business corporations statute

On January 1, 2007, amendments to the unanimous shareholder agreement (USA) provisions of Ontario’s Business Corporations Act (OBCA) came into force. The amendments mark a shift in the approach taken to the difficult question of how and when USAs bind new shareholders.

Prior to the amendments, transferees of shares were deemed to be parties to an existing USA so long as the agreement was noted on the share certificates. Now, anyone who acquires shares, whether as a transferee or through a new issue of shares, will be deemed a party to any USA that is in place at the time of acquisition, whether or not they had notice of its existence.