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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
Ontario, Canada
CORPORATION
| NAME | Northern Tech Solutions Inc. |
| REGISTERED ADDRESS | 100 Wellington Street, Suite 500, Ottawa, ON K1A 0A6 |
| CORP. NO. | CBCA-1234567 |
| INCORPORATED UNDER | Canada 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 · Unanimous SH Agreement
This Shareholder Agreement (this "Agreement") is made 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"), together the "Shareholders", who are all of the shareholders of the Corporation. The parties agree as follows:
1.
SHARE STRUCTURE AND OWNERSHIP
The authorized share capital of the Corporation is as set out in its articles, as amended from time to time. As of the Effective Date the Shareholders hold: Shareholder 1 — 600 Common shares, being 60.0% of the issued and outstanding shares (voting, one vote per share); and Shareholder 2 — 400 Common shares, being 40.0% of the issued and outstanding shares (voting, one vote per share). The Shareholders shall not be required to make further capital contributions except as unanimously agreed in writing.
2.
BOARD OF DIRECTORS
The board shall consist of 3 director(s): Shareholder 1 may appoint 2 and Shareholder 2 may appoint 1. A quorum requires the presence of a majority of directors. Each director serves at the pleasure of the appointing Shareholder, who may remove and replace that director at any time by written notice. Directors shall manage or supervise the management of the business and affairs of the Corporation, subject to this Agreement.
3.
UNANIMOUS SHAREHOLDER AGREEMENT
The Shareholders intend this Agreement to be a unanimous shareholder agreement under section 146 of the Canada Business Corporations Act, binding on the Corporation because every shareholder of the Corporation is a party to it. To the extent this Agreement restricts the powers of the directors to manage, or supervise the management of, the business and affairs of the Corporation, those powers — and the directors' corresponding duties and liabilities in respect of them — are transferred to the Shareholders who are given that power, who assume those duties and liabilities accordingly. A purchaser or transferee of shares is deemed to be a party to this Agreement.
4.
PRE-EMPTIVE RIGHTS (ANTI-DILUTION)
Before the Corporation issues any new shares or securities convertible into shares (other than to employees under a board-approved incentive plan), it shall first offer them to each Shareholder, pro rata to that Shareholder's then-current shareholding, on the same price and terms, by written notice. Each Shareholder shall have twenty (20) days to subscribe for all or part of its pro rata entitlement. Shares not taken up may then be issued to the proposed subscriber on terms no more favourable, within ninety (90) days. This protects each Shareholder against unwanted dilution of its percentage interest.
5.
RIGHT OF FIRST REFUSAL
No Shareholder may transfer, sell, assign, pledge or otherwise dispose of any shares (a "Transfer") without first offering them to the other Shareholder(s) on the same terms. The offering Shareholder shall deliver a written notice (the "Offer Notice") stating the number of shares, the price per share and the material terms. The other Shareholder(s) shall have thirty (30) days to accept in whole. If not accepted, the offering Shareholder may Transfer to the proposed third party on terms no more favourable than the Offer Notice, provided the Transfer closes within sixty (60) days and the transferee agrees in writing to be bound by this Agreement.
6.
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 may elect to participate in that Transfer on the same price and terms, pro rata to its shareholding. The Selling Shareholder shall give at least fifteen (15) days' written notice and shall ensure the third-party purchaser acquires the electing Shareholder's shares on the same terms.
7.
DRAG-ALONG RIGHTS
If Shareholders holding more than seventy-five percent (75%) of the issued and outstanding voting shares (the "Dragging Shareholders") approve a bona fide arm's-length sale of all the shares of the Corporation, they may require all other Shareholders to sell their shares on the same price and terms, on at least thirty (30) days' written notice. The dragged Shareholders shall receive the same per-share consideration as the Dragging Shareholders.
8.
SHOTGUN (BUY-SELL) PROVISION
Either Shareholder (the "Offeror") may deliver a written notice to the other (the "Offeree") offering to purchase all of the Offeree's shares at a stated price per share (the "Shotgun Notice"). Within thirty (30) days, the Offeree must either (a) sell all of its shares to the Offeror at that price, or (b) buy all of the Offeror's shares at the same price per share. Failure to respond within the period is deemed acceptance of the offer to sell. Closing shall occur within sixty (60) days of the election. This mechanism is the principal way of breaking a deadlock between two shareholders.
9.
DIVIDENDS AND DISTRIBUTIONS
Dividends shall be declared and paid at the discretion of the board, in accordance with the Corporation's articles and the Canada Business Corporations Act (CBCA). Dividends on shares of the same class shall be paid equally per share. No dividend or other distribution shall be made if it would render the Corporation unable to pay its liabilities as they become due or cause the realizable value of its assets to be less than its liabilities and stated capital (the statutory solvency test).
10.
GOOD FAITH AND SHAREHOLDER PROTECTION
Each party shall act honestly and in good faith toward the others in all matters relating to the Corporation. Nothing in this Agreement limits any Shareholder's right to apply for the oppression remedy in section 241 of the Canada Business Corporations Act where the conduct of the Corporation, or the exercise of its directors' powers, is oppressive or unfairly prejudicial to, or unfairly disregards the interests of, any Shareholder. The parties agree that their reasonable expectations for the purposes of that remedy are defined first and foremost by this Agreement (BCE Inc. v. 1976 Debentureholders, 2008 SCC 69).
11.
DISPUTE RESOLUTION
Any dispute arising out of or relating to this Agreement shall first be submitted to mediation in the Province of Ontario. If it is not resolved within thirty (30) days, it shall be finally resolved by binding arbitration before a single arbitrator under the rules of the ADR Institute of Canada (ADRIC). The award is final and binding and may be entered as a judgment in any court of competent jurisdiction.
12.
NON-COMPETITION AFTER EXIT
For one (1) year after ceasing to hold shares, a former Shareholder shall not, directly or indirectly, carry on or be engaged in any business that competes directly with the Corporation within the geographic area where the Corporation carries on business at the date of exit. This restraint is given in connection with the protection of the value of the Corporation's shares and goodwill (not as an employee covenant); it is intended to be reasonable in scope, duration and territory, and a court may read it down to the extent necessary to make it enforceable rather than strike it out.
13.
GOVERNING LAW
This Agreement is governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. If there is any conflict between this Agreement and the Corporation's articles, the parties shall take all steps within their power to amend the articles to conform; the Canada Business Corporations Act (CBCA) prevails over both to the extent of any inconsistency that cannot be contracted out of.
14.
GENERAL PROVISIONS
Entire Agreement: This Agreement is the entire agreement among the parties on its subject matter.
Amendment: No amendment is valid unless in writing and signed by all parties.
Severability: Any provision found unenforceable shall be severed and the remainder shall continue in full force.
Notices: All notices shall be in writing and delivered to the addresses recorded above.
Successors: This Agreement binds and enures to the benefit of the parties and their respective heirs, estate trustees, successors and permitted assigns.
Electronic Execution: This Agreement may be executed in counterparts, including electronic counterparts and electronic signatures, each an original and together one agreement.
Amendment: No amendment is valid unless in writing and signed by all parties.
Severability: Any provision found unenforceable shall be severed and the remainder shall continue in full force.
Notices: All notices shall be in writing and delivered to the addresses recorded above.
Successors: This Agreement binds and enures to the benefit of the parties and their respective heirs, estate trustees, successors and permitted assigns.
Electronic Execution: This Agreement may be executed in counterparts, including electronic counterparts and electronic signatures, each an original and together one agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date indicated.
CORPORATION
Northern Tech Solutions Inc.
Date: ____________________
SHAREHOLDER 1
Catherine L. Tremblay
Date: ____________________
SHAREHOLDER 2
James A. MacKenzie
Date: ____________________
Available as a print-ready PDF or an editable Microsoft Word (.docx) file.
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
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
Design Share Rights and Board Control
Decide voting rights, board composition, and which decisions require supermajority or unanimous approval.
- 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
Address Dividends and Disputes
Agree on dividend policy and a dispute-resolution ladder ending in arbitration or court, as preferred.
- 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.
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Always current with the law
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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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