ARTICLE · 18 FEBRUARY 2011

Why Do You Need A Shareholders’ Agreement?

Crowe Soberman LLP

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A shareholders’ agreement is a contract between all or some shareholders of a corporation, which allows them to establish their mutual rights and obligations.

CanadaCorporate/Commercial Law

Deborah Stern, BComm, CPA, CA

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A shareholders' agreement is a contract between all or some shareholders of a corporation, which allows them to establish their mutual rights and obligations.

Shareholders' agreements are important whether you have a family-owned business or unrelated shareholders. At best, it is a complex document and (should be) a comprehensive one as well, covering many issues. However, problems arise when it does not include certain points.

Some matters that should be resolved and included in a shareholders' agreement are:

Are spouses allowed to work in the company?
What is the "base" salary for each shareholder?
What is each shareholders' entitlement to vacation pay and benefits?

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