After divorce, a shareholder`s shares are part of the net family assets that are settled with their spouse. This could result in the shareholder`s ex-spouse being entitled to the shares in the divorce. If that were the case, you would now be in business with the ex-spouse and not with the partner with whom you entered into the agreement. Things could get even stickier if the ex-spouse, who is subject to his control of voting rights, decides to sell the business. Your livelihood is now at stake. A shareholders` agreement would alleviate this problem by limiting the transfer of shares to an ex-spouse in the event of divorce. A shareholders` agreement, also known as a shareholders` agreement, is an agreement between the shareholders of a corporation that describes how the corporation should be operated and describes the rights and obligations of shareholders. The agreement also includes information on the management of the company and the privileges and protection of shareholders. These are just some of the reasons why a shareholders` agreement is important and useful for a company to have it in its arsenal and protect individual shareholders. Each agreement should be reviewed regularly to ensure that it still operates as the company and shareholders would like, and should be updated and re-executed as shareholders come and go. Restrictions of competition – A clause that prevents shareholders from participating in companies that compete with current activities should be included.

This serves to protect the company and the interests of other shareholders. The agreement includes sections describing the fair and legitimate price of the shares (especially when they are sold). It also allows shareholders to make decisions about external parties who could become future shareholders and provides guarantees for minority positions. Dispute resolution procedure – this is the clause that establishes the process for resolving disputes between shareholders. This usually includes things like arbitration, applicable law, etc. It also includes the procedure to be followed in the event of a standstill between shareholders with the same number of shares and voting rights. However, it is important to ensure that the company`s articles of association comply with the shareholders` agreement in order to avoid uncertainties or conflicts and to ensure that appropriate remedies are available in the event of a breach of the provisions. Together, the articles and the shareholders` agreement govern and govern the management of the Company, the relations between the Company and its directors and shareholders. Below are some frequently asked questions about the benefits of a shareholders` agreement. There is no legal obligation for shareholders of a company to enter into a shareholders` agreement, and therefore a shareholders` agreement can be quite flexible with respect to the provisions included in the agreement and the topics specifically addressed.

In addition, a shareholders` agreement may prevail over certain requirements of the Corporations Act (Manitoba) or the Canada Business Corporations Act. This can be a useful tool, especially for small businesses that want the original shareholders to keep the shares instead of letting in external investors and unknown people. After all, you`ve gone into business with your business partner for a reason. A shareholders` agreement could have protected your most important asset – your business – by easily creating a clause stating that your company`s shares cannot be transferred to an ex-spouse when compensated. Capital and cash contributions – it contains clauses that specify the initial contributions to be made by shareholders and how future capital contributions or financing agreements are to be made. The short answer is yes. If you are starting a business with more than one shareholder, we strongly recommend that you enter into an agreement. It is important that a shareholders` agreement contains a rights clause. This ensures that an outgoing shareholder who leaves the company must first offer their shares to the remaining shareholders. As a result, the remaining shareholders may prevent new shareholders from acquiring a stake in the company.

Shareholder agreements generally also include unanimous approval of the issuance or transfer of shares to new shareholders. Assignment of key roles or responsibilities – If the corporation is a corporation whose shareholders are also the persons who handle the day-to-day operations of the business, this clause would explain what the respective roles, responsibilities and obligations of each shareholder should be and specify any additional compensation to which each shareholder may be entitled as a result of an additional role in the corporation, e.B. in addition to a performance-based bonus. on dividends as a shareholder. Shareholder agreements generally contain provisions on the settlement of disputes between shareholders. These clauses may include the requirement to first request that the dispute be resolved through mediation and/or arbitration. Therefore, the parties must first comply with the prescribed conditions for the settlement of disputes before initiating legal proceedings. Yes, a shareholders` agreement would avoid having to transfer half of your shares during a divorce to an ex-spouse. .