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Shareholders' Agreements
A shareholders' agreement is designed to protect each of the business's shareholders in a corporation. This document sets out special rules that the shareholders agree will govern how the company is operated and how their interests will be handled. The shareholders' agreement can contain clauses, for example, that prohibit the person who is leaving the business from selling his/her shares to an outside party without first offering the other, current shareholders the opportunity to buy his/her shares (this clause is called the FIRST RIGHT OF REFUSAL). It is advisable for shareholders of closely held companies to enter into a shareholders' agreement to regulate their relationship with one another and the company. Every business owner will have different requirements that will be reflected in a shareholders' agreement. Consult your lawyer when developing a shareholders' agreement.
The following sites containÂself-study guides to the principal components of a shareholders' agreement:
Steps to Growth Capital: The Canadian Entrepreneur's Guide to Securing Risk Capital
Business Basics for Engineers: The Shareholder's Agreement
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