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Shareholder Agreements

A shareholder agreement is a specialized contract among shareholders of a private corporation. It is designed to address typical corporation governance issues and assist shareholders in the event of a dispute. Among its many terms, it can include rules relevant to:

• director and shareholder meetings;
• shareholder loan repayment;
• selling shares to third parties (referred to as "piggy-back" clauses and "drag-along" clauses);
• forced buying/selling of shares (colloquially known as a "shotgun" or "buy/sell" clause);
• mediation/arbitration for shareholder disputes;
• retirement, disability or death of one or more shareholders; and
• key-person life insurance.

A shareholder agreement is an important component of any privately-held corporation, because it makes governance and shareholder dispute resolution significantly easier. At GMA, we encourage our privately-held corporate clients to complete a shareholder agreement at the first available opportunity. We routinely prepare these agreements and assist in their negotiation. Call us if you would like some more information.