Corporation Information




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Shareholder Information


Provide the following information about your shareholders:

First shareholder





Select the Country




Second shareholder





Select the Country





 Add another shareholder

Frequently Asked Questions
Who are the parties to the Shareholder Agreement?The parties to a Shareholder Agreement are the shareholders of the corporation.

Ideally, all shareholders will participate in the Shareholder Agreement.

Warranties



Frequently Asked Questions
Why do we need a list of shareholders?This warranty confirms for the shareholders how many shares have been issued and who owns those shares.When a shareholder warrants that they are the beneficial owner of their shares, this means that no other person has an interest in those shares nor are they held in trust for someone else.

This warranty provides additional assurance to other shareholders and creditors regarding who really owns and controls the corporation.

Directors of Corporation



Frequently Asked Questions
Why would I want the Shareholder Agreement to provide direction on director selection?It is important to have fair representation on the board of directors for both majority shareholders and minority shareholders.

It should be noted that all directors have a duty to act in the best interest of the corporation no matter how they were elected.

Alternate Directors



Officers of the Corporation



Frequently Asked Questions
Why would I want to specify the officers of the company?Specifying the officers of the corporation may prevent subsequent shareholders from firing your officers even if they acquire a majority share or control of the board of directors. This may provide a level of managerial consistency to the company.

However, for the same reason, specifying the officers may also prevent the company from attracting new investors who want to install their own management team to run the corporation.

Management of the Corporation:
Business and Finance

Select all those issues over which the shareholders should maintain control:








Frequently Asked Questions
Who will manage the company?Generally, the directors will make most of the decisions affecting the management of the company.

However, selecting specific management issues in the Shareholder Agreement preserves the right of the shareholders to maintain control over issues vital to the corporation.

You should identify all those items over which the shareholders should maintain control.

Management of the Corporation:
Capital and Assets

Select all those issues over which the shareholders should maintain control:




Frequently Asked Questions
Who will manage the company?Generally, the directors will make most of the decisions affecting the management of the company.

However, selecting specific management issues in the Shareholder Agreement preserves the right of the shareholders to determine issues vital to the corporation.

You should identify all those items over which the shareholders should maintain control.

Management of the Corporation:
Shares and New Share Issues

Select all those issues over which the shareholders should maintain control:




Frequently Asked Questions
Who will manage the company?Generally, the directors will make most of the decisions affecting the management of the company.

However, selecting specific management issues in the Shareholder Agreement preserves the right of the shareholders to determine issues vital to the corporation.

You should identify all those items over which the shareholders should maintain control.

Management of the Corporation:
Additional Management Clauses

Describe any additional issues over which the shareholders should maintain control:
(No additional clauses are needed for most agreements.)


Frequently Asked Questions
Who will manage the company?Generally, the directors will make most of the decisions affecting the management of the company.

However, selecting specific management issues in the Shareholder Agreement preserves the right of the shareholders to determine issues vital to the corporation.

You should identify all those items over which the shareholders should maintain control.

Duration of the Agreement




Frequently Asked Questions
When should my Shareholder Agreement end?The Shareholder Agreement can end when all shareholders agree to end it, or on a specific date. The option to end it 'by shareholder agreement' should only be used in the following circumstance:
  • where there are a relatively small number of shareholders,
  • where the Corporation is not thinking of taking on new shareholders, and
  • where the shareholders have a good working relationship.
Even one disgruntled shareholder could cause significant problems for the corporation by refusing to terminate the agreement, even where it would in the best interest of the corporation to do so.

If there are a relatively large number of shareholders, or where the corporation is trying to increase the number of shareholders, or if the potential exists for conflict among the shareholders, then the Shareholder Agreement should have a specific end date.

Capital Requirements of the Corporation




Frequently Asked Questions
What is the difference between a shareholder loan and a purchase of Shares?When a shareholder purchases shares, the shareholder increases their equity in the company.

When a shareholder makes a Shareholder Loan to the company, it is a personal debt owed to the shareholder by the company, as though both were private individuals. That debt must be repaid, but it does not increase the shareholder's equity in the company.

Restrictions on Transfer of Shares



Valuation of Shares




(e.g. Class A shares have a value of $10.00 per share.)





Frequently Asked Questions
What is a valuation clause and why do I need it?A valuation clause provides a method to determine the value of the corporation's shares. This process will be needed when a shareholder wants to sell his/her shares or when a shareholder dies and the other shareholders want to buy those shares.

Since most small corporations are private (not traded on a public stock exchange), the share value can be hard to determine without a predetermined method. Having this clause will reduce the uncertainty and disagreements that can occur.Why would I need a professional valuator?Shares that are not publicly traded on a stock market are hard to valuate because they are not easily convertible to cash.

Valuating the shares yourself may lead to a large over-or-under valuation. Either mistake can be detrimental to the company and to all affected shareholders.

A professional will give a more accurate valuation that is fair to all shareholders. However, you must consider the additional expense of a professional valuator.

Death or Incapacity of a Shareholder



Conflict of Interest

Non-compete Clause




Non-solicitation Clause





Frequently Asked Questions
What is a non-compete clause?A non-compete clause prohibits shareholders from competing with the corporation while they are owners in the corporation and for a short period after they have left the corporation.

In a small corporation, customers deal closely with the shareholder. A non-compete clause prevents an influential shareholder or former shareholder from attracting customers away from the corporation.

A shareholder that leaves the corporation may also possess confidential information that can be used to compete against the corporation.What is a non-solicitation clause?A non-solicitation clause prevents shareholders or former shareholders from inducing other shareholders, directors, officers or employees to leave the corporation or to compete against it.

This clause prevents an influential shareholder from stealing key employees.

Dispute Resolution






Frequently Asked Questions
What is the difference between mediation and arbitration?Mediation is a process by which a neutral third party, the mediator, assists the conflicting parties in negotiating an agreement regarding the issue in conflict.

Arbitration is a process by which the conflicting parties present their conflict to a neutral third party who decides on how to resolve the issue. When would the use of a mediator or arbitrator to settle disputes be beneficial?A mediator or arbitrator should be used when the parties are at a deadlock over an issue. Mediation and arbitration are superior processes when there is a long term relationship involved and the survival of the business relationship is desirable.

If the dispute is not resolved and goes to court, a judge may decide on a compromise that is not desirable to either party, possibly to dissolve the company. But, if both parties agree to choose a neutral third party mediator or arbitrator to resolve the dispute, the business relationship may be able to continue successfully.

Signing Details






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