Adam Frankel
General Counsel · Technology & AI
15+ years as General Counsel to technology, cloud & AI companies
BUY-SELL / BUSINESS SUCCESSION AGREEMENT
This template is for the Owners of a private corporation to agree, in advance, what happens to an Owner's Interest on death, disability, retirement, departure or deadlock — who must buy, who must sell, how the price is set, and how it is paid. It assumes the Corporation already exists and has issued Interests. It is not suitable for a public corporation, a partnership's succession planning (see partnership instead), or use in Quebec.
Drafting notes appear in italics and are to be deleted before execution. Square brackets mark information to be filled in. Delete any inapplicable optional clauses and renumber before execution.
⚠️ This template overlaps the shareholders template. Read that template, and this Agreement's README, before choosing how to use this one. A shareholders' agreement commonly contains its own transfer restrictions, right of first refusal, shotgun, tag/drag and mandatory-transfer-on-death provisions (sections 9–15 of the shareholders template). Section 2 below requires the drafter to state whether this Agreement is standalone or is intended to operate as a schedule to an existing Shareholders' Agreement. Do not adopt both this Agreement's buy-sell mechanics and equivalent provisions in a Shareholders' Agreement for the same Owners and Interests — two documents independently governing the same mandatory transfer produces conflicting obligations about who must buy, at what price, and on what timeline. See the README for the recommended approach.
⚠️ Valuation and funding are commercial and tax questions this template does not resolve. Section 12 offers three valuation mechanisms and section 13 offers two funding mechanisms as flagged alternatives. This template does not recommend one over another — the right choice depends on the Corporation's financial position, the Owners' ages and insurability, and tax structuring that requires an accountant's or tax advisor's input. This is why this template is delivery: lawyer-in-the-loop.
THIS AGREEMENT is made as of [Date].
BETWEEN:
[Corporation Legal Name] (the "Corporation")
— and —
[Owner 1 Legal Name], of [Owner 1 Address]
— and —
[Owner 2 Legal Name], of [Owner 2 Address]
(each an "Owner" and together the "Owners"; the Corporation and the Owners are together the "Parties")
This template assumes two Owners for readability. If there are more than two, replicate the parties block and the signature block for each additional Owner, and adjust Schedule A accordingly.
WHEREAS the Owners own all of the issued and outstanding Interests of the Corporation, and the Parties wish to record their agreement as to what happens to an Owner's Interest on that Owner's death, disability, retirement, departure, bankruptcy, or on a deadlock among the Owners;
NOW THEREFORE in consideration of the mutual covenants below, the Parties agree as follows:
Interpretation
In this Agreement:
"Corporation" means [Corporation Legal Name];
"Interests" means the issued and outstanding shares in the capital of the Corporation, of every class, held by an Owner;
"Fair Market Value" means the value of an Interest, determined under section 12;
This is a preview. The full template is free on GitLaw.
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About this template
What is this template?
This is a specialized corporate agreement focusing exclusively on the mandatory transfer of shares upon specific triggering events. It contains detailed valuation schedules (B) and insurance funding schedules (C) that distinguish it from a general shareholders' agreement. It is not a partnership agreement or a governance document for public companies.
When should you use it?
Use this when owners need a granular mechanism for business continuity and share liquidity that goes beyond the basic transfer provisions in a standard shareholders' agreement. If the owners are operating as a partnership rather than a corporation, use a Partnership Agreement instead.
What's inside
| Clause | Name | What it does |
|---|---|---|
| 4.1 | Triggering Events | Lists events including death, permanent disability, retirement, and bankruptcy that activate the mandatory or optional purchase and sale provisions. |
| 5.1 | Mandatory Purchase and Sale | Obliges the estate or trustee to sell and the Corporation or other Owners to purchase Interests following death, disability, or bankruptcy. |
| 7.2 | Involuntary Termination ("Bad Leaver") | Applies a specified percentage discount to the Fair Market Value if an Owner's engagement is terminated for cause. |
| 9.2 | Right of First Refusal on Voluntary Transfer | Permits existing Owners to purchase Interests offered to third parties within a fixed number of days after receiving an Offer Notice. |
| 11.2 | Deadlock | Provides for mediation, a shotgun mechanism, or an independent chairperson's casting vote if owners cannot agree for a specified number of days. |
| 12.1 | Valuation | Offers three alternative mechanisms: a fixed formula, an independent business valuator, or a periodically updated agreed value. |
| 13.1 | Funding the Purchase Price | Specifies payment via insurance proceeds, installments over a set number of months with interest, or a combination of both. |
| 16.1 | Non-Competition and Non-Solicitation on Exit | Restricts a departing Owner from competing or soliciting clients for a specified number of months within a defined geographic area. |
| 21.1 | Governing Law | Subjects the agreement to the laws of a chosen Canadian Province and the federal laws of Canada. |
Who it's for
- owners of a private Canadian corporation planning for owner exit or death
- shareholders seeking a standalone buy-sell mechanism outside their main shareholders agreement
- corporations using life insurance to fund the redemption of a deceased owner's shares
- business partners in common-law Canadian jurisdictions needing a deadlock resolution shotgun clause
How long it runs and how it's signed
How long
Runs until someone ends it
Stated duration
Until unanimous termination, single remaining owner, or dissolution
Survives the end
Valuation, Funding the Purchase Price, Life and Disability Insurance, Confidentiality
Signed by
Corporation Representative, Owner 1, Owner 2
Witness
Not required
Notarisation
Not required
Also needed
deliver share certificates duly endorsed for transfer; deliver director and officer resignations if required
Law it's drafted under
Governed by
Canada Business Corporations Act
Governed by
Business Corporations Act
Refers to
Employment Standards Act
Canada note
This version is drafted for Canada. Provinces differ on employment standards and Quebec applies civil law rather than common law. Tell GitLaw which province applies and it adjusts the draft.
Jurisdiction
Canada
Document info
GitLaw document. Document created on Mon Aug 17th, 2026. Last updated on Mon Aug 17th, 2026.
This document is public
Licensed under CC BY-SA 4.0 (Attribution-ShareAlike).
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