Most companies with more than one owner start on a handshake. The shareholders’ agreement tends to come later, often after something has gone wrong. It works far better the other way round: settle the hard questions while everyone still agrees.
The questions it answers
A good agreement is less about legal language and more about decisions you make together in advance. These are the ones that come up most:
- Leaving the company. If an owner wants out, who can buy their shares, at what price, and over what timeline?
- Death or disability. What happens to an owner’s shares if they die or can no longer work? Many agreements require a buyout and fund it with life or disability insurance.
- Selling to outsiders. A right of first refusal lets the other owners match an outside offer before shares change hands.
- A sale of the whole company. Drag-along and tag-along clauses decide whether a majority can require the minority to sell, and whether the minority can join a sale.
- Big decisions. Which decisions need unanimous or special approval, such as borrowing, issuing new shares or selling key assets?
- Deadlock. If the owners are split evenly and can’t agree, what breaks the tie?
- Valuation. How the shares are valued for a buyout: a formula, an agreed annual value, or an independent valuator.
- Competition. Whether a departing owner can compete with the company or approach its clients and employees for a period.
Unanimous shareholder agreements
Under Ontario’s Business Corporations Act, an agreement signed by every shareholder can generally also restrict the powers of the directors. That is called a unanimous shareholder agreement, and it is useful where the owners want certain decisions taken out of the board’s hands.
When to put one in place, or update it
The best time is when the company is set up or when a second owner joins. The next best time is now. Older agreements also need a look when a new investor comes in, when the share structure changes, or when an owner’s family or estate plan changes.
A shareholders’ agreement and each owner’s will should agree with each other. The agreement decides what happens to the shares; the will decides who inherits what is left.
What to bring to a first meeting
Bring your articles of incorporation, the current share register, any existing agreement, and a list of the questions you and your partners have not settled yet. Your first consultation takes 30 minutes, by video or in person.
This article is general information about Ontario law, not legal advice for your situation. Laws change; it reflects our understanding as of October 6, 2026.
