Shareholder Agreements - The Law Society of Saskatchewan

Corporate Commercial Section 6
2009 © The Law Society of Saskatchewan Shareholder Agreements
Introduction
One of the common tasks of a solicitor is the preparation of
unanimous shareholders agreements (“USA”). These are
sometimes also known as “shareholder agreements” or “buy-sell
agreements”. These agreements are essential whether the client is
involved in a small or large business, or organized as a
corporation, partnership or joint venture (although the name, if
not the form, of the agreement may change).
A USA is essentially a constitutional document, setting out the
fundamental governing principals of a corporation, and, to some
extent, permitting shareholders to modify or supplement the
articles of incorporation, bylaws and certain other rules that would
otherwise be prescribed by The Business Corporations Act
(Saskatchewan), (“SBCA”). Shareholders can eliminate or
minimize the distinction in function between those responsible for
corporate management (the directors) and its owners (the
shareholders) by restricting in whole or in part the directors’
powers under the SBCA. Due to the broad wording of section
140(2) of the SBCA, the scope of a USA is virtually unlimited.
To ensure validity, all parties to a USA should obtain independent
legal advice concerning the terms and conditions of the proposed
agreement. Shareholders may not wish to incur the additional
cost, but this is essential to protecting their respective rights.
For informational purposes only, some notes on the preparation of
USA’s, a Checklist and a sample USA are included in the
precedents.
Contents of an Unanimous
Shareholders Agreement
Section 140(2) of the SBCA defines "unanimous shareholders
agreement" as:
An otherwise lawful written agreement among all the
shareholders of a corporation, or among all the
shareholders and a person who is not a shareholder, that
restricts, in whole or in part, the powers of the directors to
manage the business and affairs of the corporation is
valid.
Saskatchewan CPLED Program
Corporate–6–1