For companies with more than one shareholder, one of the most important corporate documents to have in place is a Unanimous Shareholders Agreement (known as a “USA”).
At its most basic level, a USA is:
a contract between the shareholders of a company which sets out the rules that will apply in the future should certain eventualities arise.
Common topics which can be addressed in a USA are:
- management of the company
- compensation for that management
- how certain key decisions are made
- how profits are distributed
- how are cash calls handled
- buy-sell mechanism (shot-gun clause, valuation or fixed formula are common options)
- buy-out of a disabled shareholder
- buy-out of a deceased shareholder
- who owns the intellectual property
- non-competition and non-solicitation clauses
- drag along
- tag along
Importantly, the parties are not limited to the above topics. Many other matters of importance can be addressed in a USA.
Without a USA which sets out the ground rules to be followed in the future, there may likely be no rules which apply, which can result in a deadlock amongst the shareholders. In a worst-case scenario, expensive and uncertain litigation may arise.
A little bit of care and attention at the outset in drafting a USA can save a considerable amount of stress, animosity and legal fees in the future. A USA can be the “ounce of prevention”, to avoid a future “pound of cure”. The experienced Corporate Lawyers or Business Law Lawyers at Main Street Law LLP work collaboratively with you to provide a USA that will meet the needs of your specific business organization.
Please be advised that this article was prepared by Tyler Perozni, Corporate Lawyer and Business Law Lawyer with Main Street Law LLP in Spruce Grove in July of 2023. This article is intended as a general overview and general information on a legal subject as the law exists at the time of writing and is not intended to be legal advice. Often the specific facts of your legal matter may change or impact the applicability of this information. For legal advice related specifically to the facts of your concern, please consult with any of the Corporate Lawyers or Business Law Lawyers at Main Street Law LLP at any of our Spruce Grove, Edmonton, or Drayton Valley locations.