Document background
The Shareholder Buy-Sell Agreement serves as a crucial governance document for Canadian private corporations with multiple shareholders, providing a clear framework for ownership transitions. This agreement becomes essential when shareholders need to establish predetermined terms for various scenarios including death, disability, retirement, or voluntary departure of a shareholder. It typically includes provisions for share valuation, payment terms, funding mechanisms (often through life insurance), and transfer restrictions. The agreement helps prevent potential disputes and ensures business continuity by providing a clear exit mechanism for departing shareholders while protecting the interests of those remaining. A well-structured Buy-Sell Agreement is particularly important in the Canadian context, where it must comply with both federal and provincial corporate laws, securities regulations, and tax considerations.
