When managing a corporation, the relationship between shareholders can quickly become complex. To prevent potential conflicts and secure the interests of all parties, a shareholders’ agreement is an essential tool. More than a simple contract, it provides a legal and strategic framework that enables shareholders to clearly define their rights, obligations and roles within the company. But what is a shareholders’ agreement, and what are its specific advantages, especially when customized?
The shareholders agreement: Definition and types
What is a shareholders’ agreement?
A shareholders’ agreement is an agreement between two or more shareholders, or between one or more shareholders and the company itself. Its purpose is to structure the relationship between the parties, define management rules, protect the individual and collective interests of shareholders, and ensure continuity in the management of the company. In other words, it helps to anticipate and prevent conflicts by laying down clear rules on aspects as diverse as corporate governance, profit distribution and the transfer of shares.
What types of shareholder agreements are there in Canada?
In Canada, there are two main types of shareholder agreement:
- The Ordinary Shareholders’ Agreement (OSA): This is a general agreement between shareholders aimed at framing their relationship and providing for certain management and governance rules. The OSC offers flexibility by enabling the parties to agree on specific points without restricting the powers of the directors, and does not have to be signed by all shareholders.
- The Unanimous Shareholders’ Agreement (USA): This agreement is more binding. It enables certain decisions to be taken out of the hands of the directors and transferred directly to the shareholders. It can thus intervene in the direct management of the company and restrict the power of the directors. As the name implies, this agreement must be signed by all shareholders, and must be publicly declared to the Registraire des entreprises to inform third parties that certain powers of the directors may have been withdrawn from them.
These agreements offer considerable contractual freedom, enabling the agreement to be adapted to the specific features of each company.
Personal benefits of a customized shareholder agreement

Clarity and Protection
One of the main advantages of a shareholders’ agreement is the clarity it brings to relations between shareholders. By clearly defining the roles and responsibilities of each party, it helps prevent misunderstandings that could lead to conflict. Each shareholder knows exactly what is expected of him or her, what he or she is entitled to ask for, and the limits of his or her power within the company.
What’s more, a customized agreement protects the individual interests of each shareholder. For example, it may include clauses to protect against share dilution, or guarantee pre-emptive rights for new share issues. This security is crucial for investors seeking to preserve their control or share of capital in the company.
An important aspect of drafting the agreement is the discussion it will generate between the partners, forcing them to hold discussions that are not always easy to resolve in certain situations, such as a partner’s withdrawal from the project, or fraud.
Alignment and transmission
A customized shareholder agreement also ensures that all shareholders share a common vision of the company. This alignment is fundamental to ensuring that the company runs smoothly, even in complex situations such as the sale of shares or the integration of new investors.
In addition, a personalized agreement enables precise rules to be put in place concerning the transfer of shares, for example in the event of the death, withdrawal or incapacity of a shareholder. By incorporating specific clauses, it enables these delicate moments to be managed smoothly and ensures continuity in the management of the company.
Legal advantages of a customized shareholder agreement

Compliance and dispute prevention
From a legal point of view, the shareholders’ agreement is an effective tool for complying with legal requirements while ensuring flexibility in the management of the company. By providing for specific clauses covering various scenarios, it helps avoid costly litigation. For example, an agreement can include dispute resolution mechanisms, such as arbitration or mediation clauses, which enable conflicts to be resolved without necessarily resorting to the courts.
In the absence of such an agreement, provincial or federal laws apply. These laws, although established to protect shareholders, do not always cover all specificities and do not always provide solutions adapted to the reality of a particular company. A well-drafted shareholders’ agreement can prevent many sources of potential conflict, and potentially avoid bottlenecks that could adversely affect the company’s operations.
Revisions and adaptability
Another legal advantage of a shareholders’ agreement is its ability to evolve. The company may go through periods of growth, change or crisis that require a revision of shareholder agreements. Unlike laws, which are often rigid, a customized shareholders’ agreement can be amended by mutual consent, allowing it to be adapted to new corporate realities.
In addition, the advice of a specialized lawyer is essential to adjust the agreement in line with legal and commercial developments. The lawyer ensures that the agreement is regularly updated to meet the company’s changing needs, while remaining compliant with current legislation.
Why sign a customized shareholder agreement?

Anticipating events
A good shareholders’ agreement helps to anticipate various events in the life of the company, from potential conflicts to non-competition and the management of intellectual property. Indeed, it can include specific clauses concerning confidentiality and intellectual property rights, ensuring that any work carried out by shareholders benefits the company.
Regulating share transfers
Another key advantage is the ability of an agreement to regulate share transfers. It can provide for specific terms and conditions in the event that a shareholder wishes to sell his or her shares to a third party, or in the event of specific events such as the death of a shareholder.
Clauses such as pre-emptive rights or drag-along rights can be incorporated to protect existing shareholders and ensure a certain stability in the company’s ownership structure.
Implement more appropriate solutions
Without a shareholders’ agreement, disputes must be resolved in accordance with the laws in force, which can be time-consuming, costly and sometimes unsuited to the company’s specific needs. A customized agreement enables more appropriate solutions to be put in place, offering shareholders a quicker and more flexible resolution framework than the courts.
The “shotgun” clause mentioned above is a good example. It resolves deadlock situations by offering one of the shareholders the option of buying or selling his shares at a set price, thereby forcing a decision that puts an end to the impasse.
Conclusion
In short, a customized shareholders’ agreement is an essential tool for any corporation. It provides essential clarity in shareholder relations, protects individual interests, and helps prevent and resolve potential conflicts. It is also a flexible legal instrument that adapts to changes in the company and the legal framework.