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Shareholder Agreements

If you have one or more partners in your corporation, you will need a shareholder agreement. Shareholder agreements set out the responsibilities of each shareholder or shareholder-employee, the terms of exit of a shareholder, the process governing disputes between shareholders, the method for valuing shares, and, if need be, the process for removing a shareholder.

What Do Shareholder’s Agreements Do?

Shareholder agreements are said to target the 5 Ds – death, disability, divorce, divesture and dispute. Regarding divesture, clauses such as drag-along, piggy back, or shot gun clauses can ensure that the shares of a corporation’s minority shareholders will be bought out and ‘dragged along’ with the majority shareholders if a prospective purchaser comes along. Agreements also determine what should happen if a shareholder suffers from disability or death. In the event of divorce, a shareholder agreement would prevent shares from being transferred to one’s spouse upon equalization of net family property.

Shareholders agreements are integral to a corporation and ensure that exists or disputes are handled seamlessly and without contention.

With years of experience in corporate and commercial law, Kalfa Law is your premier partner for your business needs.

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