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Unanimous Shareholder Agreement Template
A Unanimous Shareholder Agreement (USA) is a special statutory instrument that, when signed by EVERY shareholder of a corporation (and the corporation itself), can restrict in whole or in part the powers of the directors and transfer those powers to the shareholders. Our free Canadian template is statute-aware (CBCA s.146 / OBCA s.108 / ABCA s.146 / BCBCA ss.137-140), operates as a constating document under Duha Printers v Canada, and supports pre-emptive rights, buy-sell mechanisms, drag-along/tag-along, and deadlock resolution.
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UNANIMOUS SHAREHOLDER AGREEMENT
Maplewood Holdings Ltd. — Ontario, Canada
THE CORPORATION
Maplewood Holdings Ltd.
180 Lake Shore Boulevard East, Toronto, ON M5A 3X7
Corporation no.: 2026-1182947
Incorporated under: Business Corporations Act (Ontario) (OBCA), R.S.O. 1990, c. B.16
Corporation no.: 2026-1182947
Incorporated under: Business Corporations Act (Ontario) (OBCA), R.S.O. 1990, c. B.16
By: Diana Khaledi, President and Chief Executive Officer
SHAREHOLDER 1
Diana Khaledi
180 Lake Shore Boulevard East, Suite 1200, Toronto, ON M5A 3X7
Share class: Class A Common Voting
Shares: 500
Holding: 50%
Share class: Class A Common Voting
Shares: 500
Holding: 50%
SHAREHOLDER 2
Reza Farhadi
4500 Dixie Road, Suite 800, Mississauga, ON L4W 4Y4
Share class: Class A Common Voting
Shares: 500
Holding: 50%
Share class: Class A Common Voting
Shares: 500
Holding: 50%
Effective: 2026-06-15
Shareholders: 2 · Statute: OBCA
THIS UNANIMOUS SHAREHOLDER AGREEMENT (the "Agreement") is made effective 2026-06-15 among Maplewood Holdings Ltd., a corporation incorporated under Business Corporations Act (Ontario) (OBCA), R.S.O. 1990, c. B.16 with its registered office in Ontario (the "Corporation"), and EACH of the persons listed above as shareholders (each a "Shareholder" and collectively the "Shareholders"). The Shareholders together hold all of the issued and outstanding shares of the Corporation. This Agreement is intended to operate as a unanimous shareholder agreement under section 108 of the Business Corporations Act (Ontario), R.S.O. 1990, c. B.16 and as a constating document of the Corporation within the meaning of Duha Printers (Western) Ltd v Canada, [1998] 1 SCR 795. The Shareholders intend to restrict, in whole or in part, the powers of the directors of the Corporation as set out in Article 3 below, and to transfer those powers to the Shareholders to the same extent.
1.
SHARE CAPITAL AND HOLDINGS
The Corporation has the share classes set out below, and the Shareholders hold the issued and outstanding shares in the proportions stated above.
Share classes:
Class A Common Voting — 1,000 shares issued and outstanding
Class B Non-Voting — 0 shares issued (treasury reserve for employee stock-option plan)
Issued share register:
(1) Diana Khaledi — Class A Common Voting — 500 shares — 50%
(2) Reza Farhadi — Class A Common Voting — 500 shares — 50%
Share classes:
Class A Common Voting — 1,000 shares issued and outstanding
Class B Non-Voting — 0 shares issued (treasury reserve for employee stock-option plan)
Issued share register:
(1) Diana Khaledi — Class A Common Voting — 500 shares — 50%
(2) Reza Farhadi — Class A Common Voting — 500 shares — 50%
2.
UNANIMOUS OPERATION OF THIS AGREEMENT
Each of the Shareholders, by signing below, acknowledges and confirms that this Agreement is signed by ALL of the shareholders of the Corporation, satisfying the unanimity requirement for a unanimous shareholder agreement under section 108 of the Business Corporations Act (Ontario), R.S.O. 1990, c. B.16. Any future transferee of any share of the Corporation shall be deemed, on the registration of the transfer, to be a party to this Agreement and bound by its terms — a requirement that shall be enforced by an endorsement on each share certificate of the Corporation as set out in Article 6 below. The Shareholders who exercise director powers under this Agreement have all the rights, powers, duties and liabilities of a director of the Corporation (including any liability under section 119 of the CBCA or the equivalent provincial provision), and the directors are relieved to the same extent.
3.
POWERS RESERVED TO THE SHAREHOLDERS
The following powers, which would otherwise be exercisable by the board of directors of the Corporation, are hereby transferred to the Shareholders and shall be exercised only with the approval of the Shareholders in accordance with the decision thresholds in Article 4 below. To that extent, the powers of the directors of the Corporation to manage, or supervise the management of, the business and affairs of the Corporation are correspondingly restricted under a unanimous shareholder agreement under section 108 of the Business Corporations Act (Ontario), R.S.O. 1990, c. B.16.
Any material contract above the threshold value stated below.
Any hiring, firing, or change in compensation of any officer of the Corporation (CEO, COO, CFO, General Counsel).
Declaration and payment of any dividend.
Any borrowing or pledging of any asset of the Corporation above CAD 100,000.
Any merger, sale of all or substantially all of the assets, wind-up, or change of control of the Corporation.
Any related-party transaction (any transaction between the Corporation and a Shareholder or a person related to a Shareholder).
Any change to the share capital structure, authorized share classes, or articles of incorporation.
Any change to the registered office of the Corporation.
Any change to the corporate name of the Corporation.
Any material contract above the threshold value stated below.
Any hiring, firing, or change in compensation of any officer of the Corporation (CEO, COO, CFO, General Counsel).
Declaration and payment of any dividend.
Any borrowing or pledging of any asset of the Corporation above CAD 100,000.
Any merger, sale of all or substantially all of the assets, wind-up, or change of control of the Corporation.
Any related-party transaction (any transaction between the Corporation and a Shareholder or a person related to a Shareholder).
Any change to the share capital structure, authorized share classes, or articles of incorporation.
Any change to the registered office of the Corporation.
Any change to the corporate name of the Corporation.
4.
DECISION THRESHOLDS
Each of the reserved powers in Article 3 above shall be exercised by the Shareholders at the following decision thresholds:
Material contracts above the threshold value of 250,000.00 CAD: unanimous.
Hiring, firing or compensation of executive officers: unanimous.
Declaration and payment of dividends: unanimous.
Borrowing or pledging of corporate assets: unanimous.
Mergers, sale of all assets, wind-up or change of control: unanimous.
For the avoidance of doubt: "unanimous" means the affirmative vote of ALL Shareholders entitled to vote on the matter; "supermajority (75%)" means the affirmative vote of Shareholders holding 75% or more of the issued voting shares; "simple majority" means the affirmative vote of Shareholders holding more than 50% of the issued voting shares. Decisions may be evidenced by a unanimous written resolution signed by all Shareholders entitled to vote, in which case no meeting is required.
Material contracts above the threshold value of 250,000.00 CAD: unanimous.
Hiring, firing or compensation of executive officers: unanimous.
Declaration and payment of dividends: unanimous.
Borrowing or pledging of corporate assets: unanimous.
Mergers, sale of all assets, wind-up or change of control: unanimous.
For the avoidance of doubt: "unanimous" means the affirmative vote of ALL Shareholders entitled to vote on the matter; "supermajority (75%)" means the affirmative vote of Shareholders holding 75% or more of the issued voting shares; "simple majority" means the affirmative vote of Shareholders holding more than 50% of the issued voting shares. Decisions may be evidenced by a unanimous written resolution signed by all Shareholders entitled to vote, in which case no meeting is required.
5.
DIRECTOR LIABILITY CARVE-OUT
The Shareholders acknowledge that, to the extent this Agreement transfers director powers to the Shareholders, the directors are correspondingly relieved of their statutory duties and liabilities (including without limitation the section 122 duty of care under the CBCA or the equivalent provincial provision, and the section 119 wage-claim liability) — but ONLY to the extent of the transferred powers. The directors remain liable for the powers they continue to exercise. Each Shareholder who exercises transferred director powers under this Agreement is entitled to the same statutory indemnification rights as a director, and the Corporation shall maintain directors' and officers' insurance covering each such Shareholder during the period in which they exercise transferred director powers.
6.
SHARE CERTIFICATE ENDORSEMENT NOTICE
Each share certificate of the Corporation issued at the date of this Agreement or thereafter shall bear a conspicuous endorsement substantially in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A UNANIMOUS SHAREHOLDER AGREEMENT DATED 2026-06-15 AMONG THE CORPORATION AND ALL OF ITS SHAREHOLDERS, WHICH RESTRICTS THE POWERS OF THE DIRECTORS AND IMPOSES TRANSFER RESTRICTIONS ON THE SHARES. A COPY OF THE AGREEMENT IS AVAILABLE FOR INSPECTION AT THE REGISTERED OFFICE OF THE CORPORATION."
This endorsement satisfies the requirement of section 49(8) of the Canada Business Corporations Act (and the equivalent provincial provisions) that a USA be referred to on each share certificate, failing which the USA may not be effective against a transferee without actual knowledge.
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A UNANIMOUS SHAREHOLDER AGREEMENT DATED 2026-06-15 AMONG THE CORPORATION AND ALL OF ITS SHAREHOLDERS, WHICH RESTRICTS THE POWERS OF THE DIRECTORS AND IMPOSES TRANSFER RESTRICTIONS ON THE SHARES. A COPY OF THE AGREEMENT IS AVAILABLE FOR INSPECTION AT THE REGISTERED OFFICE OF THE CORPORATION."
This endorsement satisfies the requirement of section 49(8) of the Canada Business Corporations Act (and the equivalent provincial provisions) that a USA be referred to on each share certificate, failing which the USA may not be effective against a transferee without actual knowledge.
7.
PRE-EMPTIVE RIGHTS AND ANTI-DILUTION PROTECTION
Before the Corporation issues any new shares (or any options, warrants or convertible securities), the Corporation shall first offer the new securities to each Shareholder in writing, on a pro-rata basis to that Shareholder's then-current shareholding, at the same price and on the same terms on which the new securities are proposed to be issued to any third party. Each Shareholder has 21 day(s) from receipt of the offer to elect, in writing, to subscribe for some or all of the new securities offered to that Shareholder. To the extent a Shareholder does not elect to subscribe within the response window, the Shareholders' un-elected portion shall be re-offered to the electing Shareholders on the same pro-rata basis. Only after this two-round pre-emptive process is the Corporation entitled to issue the remainder of the new securities to any third party, on terms no more favourable than those offered to the Shareholders.
Anti-dilution protection. If the Corporation issues new shares of any class at a price per share lower than the price per share paid by any existing Shareholder for the same class of share, the existing Shareholder is entitled to receive — at no additional cost — such number of additional shares of that class as will, when added to the existing Shareholder's holding, yield a weighted-average price per share equal to the lower issue price (the "broad-based weighted-average anti-dilution formula"). This protection shall not apply to issuances under a board-approved employee stock-option plan up to 10% of the issued and outstanding shares.
Anti-dilution protection. If the Corporation issues new shares of any class at a price per share lower than the price per share paid by any existing Shareholder for the same class of share, the existing Shareholder is entitled to receive — at no additional cost — such number of additional shares of that class as will, when added to the existing Shareholder's holding, yield a weighted-average price per share equal to the lower issue price (the "broad-based weighted-average anti-dilution formula"). This protection shall not apply to issuances under a board-approved employee stock-option plan up to 10% of the issued and outstanding shares.
8.
BUY-SELL MECHANISM ON TRIGGER EVENT
On the occurrence of any of the trigger events listed below, the affected Shareholder's shares shall be subject to the following buy-sell mechanism: shotgun clause — one shareholder makes a written offer to buy the other shareholders' shares at a stated price per share; the recipients must either accept that offer or buy the offering shareholder's shares at the same price per share.
Trigger events:
Death of the affected Shareholder.
Permanent disability of the affected Shareholder (defined as inability to perform the substantial duties of the Shareholder's role for a continuous period of 180 days, certified by two independent medical practitioners).
Voluntary written notice of withdrawal by the affected Shareholder, on at least 90 days' notice.
Bankruptcy or insolvency of the affected Shareholder.
Divorce of the affected Shareholder (where the divorce settlement would otherwise transfer the shares to a non-Shareholder spouse).
Termination for cause of the affected Shareholder as an officer or employee of the Corporation (just cause within the meaning of McKinley v BC Tel, 2001 SCC 38).
Material breach of this Agreement by the affected Shareholder that is not cured within 30 days of written notice.
Valuation mechanism: the shares of the affected Shareholder shall be valued at a Chartered Business Valuator (CBV) jointly appointed by the shareholders, with the cost shared equally. The valuation shall be binding on all parties and shall be performed within 60 days of the trigger event.
Payment for the purchased shares shall be made within 90 days of the valuation, in immediately available funds, or on the longer payment terms agreed by the parties or determined by the valuator having regard to the financial circumstances of the buying Shareholder(s) and the liquidity of the Corporation. On payment in full, the affected Shareholder shall execute and deliver all instruments necessary to transfer the shares to the buying Shareholder(s) free of all encumbrances.
Trigger events:
Death of the affected Shareholder.
Permanent disability of the affected Shareholder (defined as inability to perform the substantial duties of the Shareholder's role for a continuous period of 180 days, certified by two independent medical practitioners).
Voluntary written notice of withdrawal by the affected Shareholder, on at least 90 days' notice.
Bankruptcy or insolvency of the affected Shareholder.
Divorce of the affected Shareholder (where the divorce settlement would otherwise transfer the shares to a non-Shareholder spouse).
Termination for cause of the affected Shareholder as an officer or employee of the Corporation (just cause within the meaning of McKinley v BC Tel, 2001 SCC 38).
Material breach of this Agreement by the affected Shareholder that is not cured within 30 days of written notice.
Valuation mechanism: the shares of the affected Shareholder shall be valued at a Chartered Business Valuator (CBV) jointly appointed by the shareholders, with the cost shared equally. The valuation shall be binding on all parties and shall be performed within 60 days of the trigger event.
Payment for the purchased shares shall be made within 90 days of the valuation, in immediately available funds, or on the longer payment terms agreed by the parties or determined by the valuator having regard to the financial circumstances of the buying Shareholder(s) and the liquidity of the Corporation. On payment in full, the affected Shareholder shall execute and deliver all instruments necessary to transfer the shares to the buying Shareholder(s) free of all encumbrances.
9.
DRAG-ALONG AND TAG-ALONG RIGHTS
Drag-along right. If Shareholders holding 75% or more of the issued and outstanding voting shares of the Corporation (the "Drag-Along Sellers") agree in writing to sell their shares to a bona fide third-party purchaser at arms'-length, the Drag-Along Sellers may by written notice require all remaining Shareholders to sell their shares to the same purchaser at the same price per share and on the same terms. The remaining Shareholders shall execute and deliver all instruments necessary to give effect to the sale within 30 days of the written notice. The drag-along right may be exercised only where the price per share is no lower than the most recent valuation (or agreed formula valuation) and the terms include customary representations and warranties from the Drag-Along Sellers only (the remaining Shareholders shall not be required to give representations and warranties beyond title and authority).
Tag-along right. Conversely, if Shareholders holding 50% or more of the issued and outstanding voting shares (the "Tag-Along Sellers") propose to sell their shares to a bona fide third-party purchaser at arms'-length, the Tag-Along Sellers shall first give 30 days' written notice to each remaining Shareholder of the proposed sale. Each remaining Shareholder is entitled to participate in the sale on a pro-rata basis (based on shareholding) at the same price per share and on the same terms, by giving written notice of the election within 30 days of receipt of the Tag-Along Sellers' notice. The Tag-Along Sellers shall not proceed with the proposed sale until the tag-along response window has expired.
Tag-along right. Conversely, if Shareholders holding 50% or more of the issued and outstanding voting shares (the "Tag-Along Sellers") propose to sell their shares to a bona fide third-party purchaser at arms'-length, the Tag-Along Sellers shall first give 30 days' written notice to each remaining Shareholder of the proposed sale. Each remaining Shareholder is entitled to participate in the sale on a pro-rata basis (based on shareholding) at the same price per share and on the same terms, by giving written notice of the election within 30 days of receipt of the Tag-Along Sellers' notice. The Tag-Along Sellers shall not proceed with the proposed sale until the tag-along response window has expired.
10.
DEADLOCK RESOLUTION AND TERMINATION
In the event of a deadlock among the Shareholders on any matter requiring unanimous or supermajority approval under Article 4 above (a "Deadlock"), the Shareholders shall resolve the Deadlock by the following three-step escalation:
Step 1 — Negotiation. The Shareholders shall each appoint a senior representative to negotiate the matter in good faith for a period of fourteen (14) days from the date of the Deadlock.
Step 2 — Mediation. If the Deadlock is not resolved within the negotiation period, the Shareholders shall jointly retain a mediator from the ADR Institute of Canada (or another mutually agreed mediator) and shall participate in a structured mediation lasting up to 30 day(s). The cost of mediation shall be shared equally.
Step 3 — Binding arbitration. If the Deadlock is not resolved by mediation, the Deadlock shall be referred to binding arbitration before a single arbitrator agreed by the Shareholders or, failing agreement, appointed by the ADR Institute of Canada. The seat of the arbitration shall be Toronto, Ontario. The arbitration shall be governed by the National Arbitration Rules of the ADR Institute of Canada (or another mutually agreed rule set) and shall be conducted in English. The arbitrator may grant any remedy reasonably necessary to resolve the Deadlock, including (where the Deadlock is fundamental and incapable of practical resolution) an order requiring the parties to apply the buy-sell mechanism in Article 8 above with the buying party determined by the arbitrator.
Termination of this Agreement. This Agreement (and the Shareholders' status as parties to it) shall terminate on the earliest of: (a) the unanimous written agreement of all Shareholders; (b) the dissolution of the Corporation; (c) the completion of an initial public offering (IPO) of the shares of the Corporation; (d) the date on which only one Shareholder remains (in which case the single Shareholder's declaration shall continue to operate as a USA under section 146(2) of the CBCA or the equivalent provincial provision); or (e) the completion of a sale of all of the shares of the Corporation under the drag-along right in Article 9 above.
Step 1 — Negotiation. The Shareholders shall each appoint a senior representative to negotiate the matter in good faith for a period of fourteen (14) days from the date of the Deadlock.
Step 2 — Mediation. If the Deadlock is not resolved within the negotiation period, the Shareholders shall jointly retain a mediator from the ADR Institute of Canada (or another mutually agreed mediator) and shall participate in a structured mediation lasting up to 30 day(s). The cost of mediation shall be shared equally.
Step 3 — Binding arbitration. If the Deadlock is not resolved by mediation, the Deadlock shall be referred to binding arbitration before a single arbitrator agreed by the Shareholders or, failing agreement, appointed by the ADR Institute of Canada. The seat of the arbitration shall be Toronto, Ontario. The arbitration shall be governed by the National Arbitration Rules of the ADR Institute of Canada (or another mutually agreed rule set) and shall be conducted in English. The arbitrator may grant any remedy reasonably necessary to resolve the Deadlock, including (where the Deadlock is fundamental and incapable of practical resolution) an order requiring the parties to apply the buy-sell mechanism in Article 8 above with the buying party determined by the arbitrator.
Termination of this Agreement. This Agreement (and the Shareholders' status as parties to it) shall terminate on the earliest of: (a) the unanimous written agreement of all Shareholders; (b) the dissolution of the Corporation; (c) the completion of an initial public offering (IPO) of the shares of the Corporation; (d) the date on which only one Shareholder remains (in which case the single Shareholder's declaration shall continue to operate as a USA under section 146(2) of the CBCA or the equivalent provincial provision); or (e) the completion of a sale of all of the shares of the Corporation under the drag-along right in Article 9 above.
11.
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, including Business Corporations Act (Ontario) (OBCA), R.S.O. 1990, c. B.16. Each Shareholder and the Corporation attorns to the exclusive jurisdiction of the courts of Ontario for all matters arising out of this Agreement that are not within the jurisdiction of the arbitrator under Article 10 above.
12.
COUNTERPARTS AND ELECTRONIC SIGNATURE
This Agreement may be signed in counterparts, including by electronic signature transmitted by email or PDF, each of which is deemed an original and all of which together constitute one and the same Agreement. The Corporation shall maintain at its registered office a fully executed original (or a single electronic compilation of all counterpart signature pages), and shall deliver a counterpart copy to each Shareholder.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date indicated.
THE CORPORATION
Diana Khaledi
President and Chief Executive Officer
Maplewood Holdings Ltd.
Date: ____________________
SHAREHOLDER 1
Diana Khaledi
Date: ____________________
SHAREHOLDER 2
Reza Farhadi
Date: ____________________
Available as a print-ready PDF or an editable Microsoft Word (.docx) file.
What Is a Unanimous Shareholder Agreement?
A Unanimous Shareholder Agreement (USA) is a special form of shareholders' agreement recognised under the Canada Business Corporations Act (CBCA) section 146 and the equivalent provincial statutes (Ontario Business Corporations Act section 108, Alberta Business Corporations Act section 146). When signed by EVERY shareholder of a corporation, a USA can restrict in whole or in part the powers of the directors to manage the business and affairs of the corporation and transfer those powers to the shareholders.
A USA goes BEYOND a generic shareholders' agreement. The Supreme Court of Canada in Duha Printers (Western) Ltd v Canada, [1998] 1 SCR 795 held that a USA is a "constating document" of the corporation — part contractual, part constitutional in nature — and that it can shift de jure control of the corporation for tax purposes. The Income Tax Act treats a USA as relevant to the determination of control for purposes of the non-capital-loss carryover rules (s.111(5)), the associated-corporation rules (s.256), and the small-business-deduction tests.
British Columbia's Business Corporations Act does NOT have a direct USA equivalent. BC uses a shareholders' agreement signed by all shareholders, with similar effect under sections 137 (restrictions on directors' powers) and 140 (effect of certain unanimous shareholder agreements). This template surfaces a province-specific recital when BC is selected as the incorporating jurisdiction.
What's Covered in This Template
Our Unanimous Shareholder Agreement template covers every element a Canadian corporate-finance lawyer would expect.
Corporation Identification
Legal name, registered office, corporation number, incorporating Act (CBCA / OBCA / ABCA / BCBCA / others), share classes and effective date.
All Shareholders (Repeatable)
Every shareholder of the Corporation — name, address, share class, share count, percentage holding. Unanimity is the threshold condition.
Powers Reserved to Shareholders
Director powers transferred to the Shareholders — material contracts, hiring/firing officers, dividends, borrowing, mergers, related-party transactions, share capital changes.
Decision Thresholds
Per-category thresholds (unanimous / supermajority 75% / simple majority over 50%) for each reserved power.
Director Liability Carve-Out
Records that directors are relieved of statutory duties (CBCA s.122 duty of care, s.119 wage liability) to the extent of the transferred powers.
Share Certificate Endorsement
CBCA s.49(8) notice requirement — without this endorsement, the USA may not be effective against transferees without actual knowledge.
Pre-Emptive Rights + Anti-Dilution (Expert)
Pro-rata first offer to existing Shareholders on new issues + broad-based weighted-average anti-dilution protection on down-rounds.
Buy-Sell Mechanism (Expert)
Shotgun / Russian roulette / Texas shootout / FMV buyout / put-call rights with named trigger events (death, disability, withdrawal, bankruptcy, divorce, for-cause termination, material breach).
Drag-Along + Tag-Along (Expert)
Drag-along forces minority on majority sale at configurable threshold (75% default); tag-along gives minority right to participate at proportional threshold (50% default).
Deadlock Resolution (Expert)
Three-step escalation (negotiation → mediation → binding arbitration before ADR Institute of Canada), with arbitrator authority to apply buy-sell mechanism in a fundamental deadlock.
USA Termination Triggers (Expert)
Defined exit triggers — unanimous agreement / dissolution / IPO / single-shareholder / drag-along sale.
How to Create Your USA
Follow these steps to draft a USA that satisfies the statutory unanimity requirement, transfers director powers cleanly, and survives the McKinley-equivalent corporate-law scrutiny.
- 1
Confirm All Shareholders Will Sign
A USA must be signed by EVERY shareholder of the Corporation. If even one shareholder refuses, the document is at most a shareholders' agreement under ordinary contract law — it does NOT have the constating-document effect of CBCA s.146.
- 2
Pick the Correct Incorporating Act
CBCA s.146 for federal corporations; OBCA s.108 for Ontario; ABCA s.146 for Alberta; BCBCA ss.137 and 140 for British Columbia (no direct USA equivalent but substantially similar effect).
- 3
List the Reserved Powers Carefully
Each power reserved to the Shareholders transfers BOTH the right to decide AND the corresponding liability to the Shareholders. Material contracts above a threshold value, hiring/firing officers, dividends, borrowing, mergers and related-party transactions are the typical core reservations.
- 4
Set Per-Category Decision Thresholds
Unanimous for fundamental matters (mergers, sale of all assets, share capital changes); supermajority (75%) for material operational matters (borrowing, large contracts); simple majority for routine matters (dividends).
- 5
Add the Share Certificate Endorsement
CBCA s.49(8) requires that each share certificate refer to the USA. Without the endorsement, the USA may not be effective against a transferee without actual knowledge — a major hole in protection.
- 6
Add the Pre-Emptive + Buy-Sell + Drag/Tag Layer (Expert)
These three together form the standard Canadian VC-grade exit-and-protection framework. Without them, minority Shareholders can be diluted out, exits can be blocked by single holdouts, and trigger events (death, divorce, breach) can leave the Corporation locked.
- 7
Add the Deadlock Resolution Mechanism (Expert)
In 50/50 or otherwise deadlock-prone corporations, the absence of a deadlock-resolution mechanism can leave the Corporation paralysed. The three-step Canadian escalation (negotiate → mediate → arbitrate) is the standard.
- 8
Have Every Shareholder Obtain Independent Legal Advice
Each Shareholder should obtain independent legal advice before signing. ILA materially reduces the risk of a later challenge based on duress, undue influence or unconscionability.
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Legal Considerations
USAs are governed by the federal CBCA, the provincial business corporations Acts, the common-law of contract, and the Supreme Court of Canada's Duha Printers doctrine.
This template is for informational purposes only and does not constitute legal advice. USAs have significant corporate, tax and personal-liability consequences for the shareholders. Consult a qualified Canadian corporate lawyer in your jurisdiction for advice specific to your situation, particularly where: the Corporation has more than five shareholders; minority Shareholders are involved; significant capital is at stake; the Corporation operates in a regulated sector; or the USA is being used to shift de jure control for tax purposes.
Reviewed for Canadian federal and common-law-province requirements
CBCA Section 146 — USA Framework
Section 146(1) of the CBCA provides that an otherwise lawful written agreement among all the shareholders of a corporation (or among all the shareholders and one or more persons who are not shareholders) that restricts, in whole or in part, the powers of the directors to manage the business and affairs of the corporation is valid. Section 146(2) deems a single-shareholder declaration to be a USA. Section 146(3) deems a transferee of shares to be a party to the USA. Section 146(5) transfers the rights, duties, powers AND LIABILITIES of directors (including under s.119) to the Shareholders to the extent of the transferred powers, and relieves the directors to the same extent. Section 146(6) clarifies that nothing prevents Shareholders from fettering their discretion in exercising director powers under a USA.
Duha Printers — De Jure Control
In Duha Printers (Western) Ltd v Canada, [1998] 1 SCR 795 (decided 28 May 1998), the Supreme Court of Canada held that a USA is a "corporate-law hybrid, part contractual and part constitutional in nature" and is to be considered a constating document of the corporation for the purposes of determining de jure control under section 111(5) of the Income Tax Act. The case has been consistently applied since 1998 and remains the leading authority for the tax-control-shifting effect of USAs. Practitioners use USAs to shift de jure control for non-capital-loss carryover purposes (s.111(5)), associated-corporation purposes (s.256), and small-business-deduction purposes.
CBCA Section 49(8) — Share Certificate Notice
CBCA section 49(8) requires that the existence of a USA be referred to on each share certificate of the Corporation. The statutory consequence of non-compliance is significant: where a transferee acquires shares without actual knowledge of the USA, the USA may not be effective against that transferee. The share-certificate-endorsement clause in this template provides the standard form of notice that satisfies section 49(8) and the equivalent provincial provisions.
Provincial Equivalents
OBCA section 108 mirrors CBCA s.146 and is the operative provision for Ontario corporations. ABCA section 146 mirrors CBCA s.146 for Alberta. BCBCA does NOT have a direct USA equivalent — BC uses a shareholders' agreement signed by all shareholders with similar effect under sections 137 (restrictions on directors' powers) and 140 (effect of certain unanimous shareholder agreements). When drafting for a BC corporation, the terminology should be "shareholders' agreement" rather than "USA" — this template surfaces a BC-specific recital when BCBCA is selected.
Restrictive Covenants — Shafron Reasonableness
Where the Expert buy-sell mechanism includes a non-compete or non-solicit covenant binding the exiting Shareholder, the covenant must satisfy the strict reasonableness standard articulated by the Supreme Court of Canada in Shafron v KRG Insurance Brokers (Western) Inc, 2009 SCC 6. The temporal, geographic and activity scope must be reasonable and unambiguous. Notional severance is NOT available to cure an unreasonable covenant; blue-pencil severance is reserved for trivial defects only. Shareholder agreements should not rely on judicial reading-down — the covenants must be enforceable as written.
Income Tax Act Implications
Under Duha Printers, a USA can shift de jure control of the Corporation for tax purposes — a powerful tool but a double-edged sword. Positive uses: preserving non-capital losses on share-ownership changes (where the USA prevents a change in de jure control); preserving associated-corporation status for small-business-deduction purposes; shifting losses within a corporate group. Negative consequences: an unintended USA can trigger an acquisition-of-control event under section 256(7) of the Income Tax Act, freezing losses and changing the corporation's taxation year. USAs with tax-control-shifting intent should be drafted with a tax lawyer involved.
Quebec — Excluded From This Template
Quebec is governed by the Business Corporations Act (Québec) (QBCA) and the Civil Code of Québec. Quebec's corporate-law regime differs in several material respects from the common-law provinces. A separate Quebec-specific USA template will follow in a future sprint.
Frequently Asked Questions
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Build a CBCA s.146-compliant, Duha-Printers-recognised USA in minutes. The Free version produces a self-executing USA with corporation, all shareholders, reserved powers, decision thresholds, director liability carve-out and share-certificate endorsement. Upgrade to Expert to add pre-emptive rights + broad-based weighted-average anti-dilution, the buy-sell mechanism (shotgun / Russian roulette / Texas shootout / FMV buyout / put-call) with named trigger events, drag-along + tag-along on a control sale, and the three-step deadlock-resolution escalation (negotiation → mediation → arbitration before ADR Institute of Canada) with USA termination triggers (IPO / dissolution / single-shareholder / drag sale).
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