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Alberta corporations are governed by the Business Corporations Act, but the statute leaves many practical issues open. A shareholder agreement fills the gap between owners, ideally while everyone still gets along.
Control and decisions
The agreement can say who sits on the board, which decisions need unanimous or supermajority approval and how deadlocks are handled. Alberta law also allows a unanimous shareholder agreement to take powers away from directors and give them to shareholders.
Set out what happens if owners cannot agree, whether through mediation, a buy-sell clause or a third-party sale.
Getting in and getting out
Transfer restrictions and rights of first refusal keep shares from ending up with strangers. Tag-along and drag-along rights protect minority and majority owners in a sale. A buy-sell, sometimes called a shotgun clause, lets one owner name a price and the other choose to buy or sell.
Plan for death, disability and divorce, since an owner’s share can pass to someone who is not a partner in the business.
Protections and restrictions
Consider non-competition and non-solicitation clauses, confidentiality, information rights for minority holders and how new shares are issued. Restrictive covenants must be reasonable to be enforceable, so they should be drafted with care.
Clauses to raise with your co-owners
- What decisions need more than a simple majority?
- How are disputes and deadlocks resolved?
- What happens on death, disability, divorce or an owner wanting out?
- Which restrictive covenants are reasonable for this business?