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Shareholder Agreement Template

A shareholder agreement governs the relationship between the owners of a Canadian corporation. Use our free template to set out share rights, voting arrangements, transfer restrictions, and dispute resolution — drafted with the Ontario Business Corporations Act and Canada Business Corporations Act in mind.

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SHAREHOLDER AGREEMENT
Province Of Ontario, Canada
CORPORATION
NAMENorthern Tech Solutions Inc.
REGISTERED ADDRESS100 Wellington Street, Suite 500, Ottawa, ON K1A 0A6
CORP. NO.BC1234567
INCORPORATED UNDERCanada Business Corporations Act (CBCA)
SHAREHOLDER 1
Catherine L. Tremblay
123 Bay Street, Suite 4500, Toronto, ON M5J 2T3
SHAREHOLDER 2
James A. MacKenzie
456 Burrard Street, Suite 2200, Vancouver, BC V6C 2R8
Effective: April 1, 2026
Total Shares: 1,000
This Shareholder Agreement (this "Agreement") is entered into as of April 1, 2026 by and among Northern Tech Solutions Inc. (the "Corporation"), Catherine L. Tremblay ("Shareholder 1"), and James A. MacKenzie ("Shareholder 2"), collectively referred to as the "Shareholders". The parties agree as follows:
1.
SHARE STRUCTURE AND OWNERSHIP
The authorized share capital of the Corporation consists of the shares set out in the Corporation's articles of incorporation, as may be amended from time to time. As of the Effective Date, the Shareholders hold the following shares: Shareholder 1 holds 600 Common shares representing 60.0% of the issued and outstanding shares (voting, one vote per share); and Shareholder 2 holds 400 Common shares representing 40.0% of the issued and outstanding shares (voting, one vote per share).
2.
BOARD OF DIRECTORS
The board of directors of the Corporation shall consist of 3 director(s). Shareholder 1 shall be entitled to appoint 2 director(s) and Shareholder 2 shall be entitled to appoint 1 director(s). A quorum for meetings of the board shall require the presence of a majority of directors. Directors shall serve at the pleasure of the appointing Shareholder and may be removed and replaced at any time by written notice from the appointing Shareholder.
3.
RIGHT OF FIRST REFUSAL
No Shareholder shall transfer, sell, assign, pledge, or otherwise dispose of any shares in the Corporation (a "Transfer") without first offering such shares to the other Shareholder(s) on the same terms and conditions. The offering Shareholder shall deliver a written notice (the "Offer Notice") specifying the number of shares, the proposed price per share, and the material terms of the proposed Transfer. The other Shareholder(s) shall have thirty (30) days from receipt of the Offer Notice to accept the offer in whole. If the offer is not accepted within such period, the offering Shareholder may proceed with the Transfer to the proposed third-party purchaser on terms no more favorable than those in the Offer Notice, provided that such Transfer is completed within sixty (60) days.
4.
TAG-ALONG RIGHTS
If any Shareholder (the "Selling Shareholder") proposes to Transfer shares to a third party (after compliance with the right of first refusal, if applicable), each other Shareholder (the "Tag-Along Shareholder") shall have the right to participate in such Transfer on the same terms and conditions, pro rata based on their respective shareholdings. The Selling Shareholder shall provide written notice of the proposed Transfer at least fifteen (15) days prior to closing. If the Tag-Along Shareholder elects to participate, the Selling Shareholder shall ensure that the third-party purchaser acquires the Tag-Along Shareholder's shares on the same price per share and terms.
5.
DRAG-ALONG RIGHTS
If Shareholders holding in aggregate more than seventy-five percent (75%) of the issued and outstanding voting shares (the "Dragging Shareholders") approve a bona fide sale of all or substantially all of the shares of the Corporation to an arm's length third party, the Dragging Shareholders may require all other Shareholders (the "Dragged Shareholders") to sell their shares on the same terms and conditions. The Dragging Shareholders shall provide at least thirty (30) days' written notice to the Dragged Shareholders prior to the closing of such transaction. The Dragged Shareholders shall receive the same price per share and terms as the Dragging Shareholders.
6.
SHOTGUN (BUY-SELL) PROVISION
Either Shareholder (the "Offeror") may at any time deliver a written notice to the other Shareholder (the "Offeree") offering to purchase all of the Offeree's shares at a specified price per share (the "Shotgun Notice"). Within thirty (30) days of receiving the Shotgun Notice, the Offeree must either: (a) accept the offer and sell all of their shares to the Offeror at the specified price; or (b) purchase all of the Offeror's shares at the same price per share. If the Offeree fails to respond within the thirty (30) day period, the Offeree shall be deemed to have accepted the offer to sell. The closing of any transaction under this provision shall occur within sixty (60) days of the election.
7.
DIVIDENDS AND DISTRIBUTIONS
Dividends shall be declared and paid at the discretion of the board of directors, in accordance with the Corporation's articles and the applicable provisions of the Canada Business Corporations Act (CBCA). Dividends on shares of the same class shall be paid equally on a per-share basis. No distribution shall be made that would render the Corporation insolvent or unable to satisfy its liabilities as they become due, pursuant to the applicable corporate statute.
8.
DISPUTE RESOLUTION
Any dispute arising out of or relating to this Agreement shall first be submitted to mediation in the Province of Ontario. If mediation fails to resolve the dispute within thirty (30) days, the dispute shall be finally resolved by binding arbitration conducted in accordance with the rules of the ADR Institute of Canada, by a single arbitrator. The decision of the arbitrator shall be final and binding and may be entered as a judgment in any court of competent jurisdiction.
9.
NON-COMPETITION AFTER EXIT
For a period of 1 year following the date on which a Shareholder ceases to hold shares in the Corporation, such Shareholder shall not, directly or indirectly, engage in, own, manage, or provide services to any business that competes directly with the Corporation within the geographic area where the Corporation conducts business. This restriction is intended to be reasonable in scope and duration under Canadian law and is in addition to any other restrictive covenants agreed by the parties. Canadian courts may modify overbroad restrictions to the minimum extent necessary to make them enforceable.
10.
GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. To the extent of any conflict between this Agreement and the Canada Business Corporations Act (CBCA) or the Corporation's articles of incorporation, the corporate statute shall prevail.
11.
GENERAL PROVISIONS
Entire Agreement: This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof. Amendment: This Agreement may only be amended by written instrument signed by all parties. Severability: If any provision is found unenforceable, the remaining provisions shall continue in full force and effect. Notices: All notices shall be in writing and delivered to the addresses set out herein. Electronic Execution: This Agreement may be executed in counterparts, including electronic counterparts, under applicable provincial electronic commerce legislation.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date first written above.
CORPORATION
Northern Tech Solutions Inc.
Date: ____________________
SHAREHOLDER 1
Catherine L. Tremblay
Date: ____________________
SHAREHOLDER 2
James A. MacKenzie
Date: ____________________

What Is a Shareholder Agreement?

A shareholder agreement is a contract among the shareholders of a corporation (and often the corporation itself) that supplements or modifies the rights and duties set out in the articles, by-laws, and the governing corporate statute. It addresses share classes, voting rights, board composition, transfer restrictions, exit mechanics, and dispute resolution. Shareholder agreements are used by private corporations of all sizes, from two-founder start-ups to established family-owned businesses.

Canadian corporations are governed either federally under the Canada Business Corporations Act, R.S.C. 1985, c. C-44 (CBCA), or provincially under statutes such as Ontario’s Business Corporations Act, R.S.O. 1990, c. B.16 (OBCA). Both statutes recognize a special form of shareholder agreement called a unanimous shareholder agreement (USA) — section 146 of the CBCA and section 108 of the OBCA — which can transfer powers normally reserved to the board of directors to the shareholders themselves.

A well-drafted shareholder agreement prevents common disputes by specifying in advance how key decisions will be made, how shares can be transferred, and how the parties will exit if the relationship breaks down. It also reduces reliance on the oppression remedy under section 241 of the CBCA and section 248 of the OBCA by giving shareholders clear contractual rights and expectations.

What's Covered in This Template

Our shareholder agreement is drafted to work alongside Canadian corporate statutes and handle the most common ownership scenarios.

Parties and Corporation

Legal names of each shareholder, their shareholdings, and details of the corporation.

Share Classes and Rights

Description of each class of shares, voting rights, dividend rights, and liquidation preferences.

Board Composition and Governance

Rules for appointing directors, board quorum, reserved matters, and chair rights.

Reserved and Supermajority Matters

Decisions requiring supermajority or unanimous approval, such as new share issuances and material contracts.

Transfer Restrictions

Right of first refusal, pre-emptive rights on new issuances, and permitted transfers to affiliates or family.

Drag-Along and Tag-Along Rights

Majority-led sale mechanisms and minority protection on a sale to a third party.

Shotgun and Buy-Sell Clauses

Exit mechanisms allowing one shareholder to force a buyout of another.

Dividends and Distributions

Policies on retention versus distribution of profits, subject to solvency tests under corporate law.

Dispute Resolution

Escalation, mediation, and arbitration procedures for shareholder disputes.

Governing Law and Jurisdiction

Selection of the province or federal jurisdiction governing the corporation and the agreement.

How to Create a Shareholder Agreement

Follow these steps to produce a shareholder agreement that reflects the ownership structure.

  1. 1

    Confirm the Corporate Structure

    Identify whether the corporation is incorporated federally under the CBCA or provincially (e.g., OBCA) and list each shareholder and their class of shares.

  2. 2

    Design Share Rights and Board Control

    Decide voting rights, board composition, and which decisions require supermajority or unanimous approval.

  3. 3

    Set Transfer Rules and Exit Mechanics

    Add rights of first refusal, drag-along, tag-along, and shotgun provisions calibrated to the ownership balance.

  4. 4

    Address Dividends and Disputes

    Agree on dividend policy and a dispute-resolution ladder ending in arbitration or court, as preferred.

  5. 5

    Review and Sign

    Preview the agreement, ensure consistency with the articles and by-laws, and sign — consider designating it a unanimous shareholder agreement where all shareholders are signing.

Legal Considerations

Several Canadian corporate statutes and doctrines shape how shareholder agreements operate.

This template is for informational purposes only and does not constitute legal advice. Consult a qualified lawyer in your province for advice specific to your situation.

Reviewed for Canadian law

Unanimous Shareholder Agreements (USAs)

Both section 108 of the Business Corporations Act, R.S.O. 1990, c. B.16 (OBCA), and section 146 of the Canada Business Corporations Act, R.S.C. 1985, c. C-44 (CBCA), authorize a unanimous shareholder agreement signed by all shareholders. A USA can restrict, in whole or in part, the powers of the directors to manage the business and affairs of the corporation, shifting those powers to shareholders who then assume the corresponding duties and liabilities.

Oppression Remedy

Section 248 of the OBCA and section 241 of the CBCA provide an oppression remedy to shareholders whose reasonable expectations have been unfairly disregarded or prejudiced. Courts have broad discretion to order remedies, including buyouts, share issuances, and winding up. A clear shareholder agreement helps define those reasonable expectations and can reduce the scope for oppression claims.

Directors’ Fiduciary Duties

Section 134 of the OBCA and section 122 of the CBCA require directors to act honestly and in good faith with a view to the best interests of the corporation, and to exercise the care, diligence, and skill of a reasonably prudent person. In Peoples Department Stores Inc. (Trustee of) v. Wise, 2004 SCC 68, and BCE Inc. v. 1976 Debentureholders, 2008 SCC 69, the Supreme Court of Canada confirmed that the duty is owed to the corporation itself, not directly to shareholders or creditors.

Share Transfer Restrictions and Securities Laws

Private Canadian corporations typically restrict share transfers in their articles and shareholder agreement. Any issuance or transfer of shares must also comply with applicable securities laws, including the private issuer exemption under National Instrument 45-106. The shareholder agreement should be consistent with the articles, by-laws, and applicable securities prospectus exemptions.

Frequently Asked Questions

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