What if I don’t have a shareholders’ agreement?

If you own your corporation with one or more other shareholders, you need a shareholder agreement.

The law doesn’t automatically provide for a buyout if one shareholder dies, or gets divorced, or becomes disabled, or what happens if the shareholders aren’t getting along. In the example of shareholders with irreconcilable differences, the Business Corporations Act (Alberta) does not contain any mechanism that A shareholder could use to force another shareholder out of the company, or to force that other shareholder to buy out the first shareholder (even if one shareholder owns 99% of the shares).

Sometimes business owners (wrongly) believe that the company will automatically buy their shares and that their family will get money for those shares, but that doesn’t happen automatically unless there is a written a shareholders’ agreement requiring that to happen.

All of these things and so many more just don’t happen unless you have a legally binding shareholders’ agreement.