Adam Frankel
General Counsel · Technology & AI
15+ years as General Counsel to technology, cloud & AI companies
SHAREHOLDERS' AGREEMENT
This template is for the shareholders of a private corporation incorporated federally or in a Canadian common-law province or territory. It is not suitable for a public corporation, and it is not suitable for 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 assumes the Corporation already exists and has issued Shares. It does not cover incorporation itself. It assumes a small number of Shareholders who are all parties to this Agreement — it is not drafted for a corporation with shareholders who are not party to it.
⚠️ Restricting the directors' powers requires exact compliance. If the Shareholders intend this Agreement to operate as a statutory unanimous shareholders agreement — shifting some or all of the directors' powers, and the liabilities that go with them, to the Shareholders exercising those powers — the applicable corporate statute prescribes specific mechanics for that to take effect. This template flags where that choice is made (section 2.3) and does not assert that doing so, on its own, satisfies those mechanics. Confirm compliance with the applicable statute before relying on this Agreement to shift directors' powers or liability.
THIS AGREEMENT is made as of [Date].
BETWEEN:
[Corporation Legal Name] (the "Corporation")
— and —
[Shareholder 1 Legal Name], of [Shareholder 1 Address]
— and —
[Shareholder 2 Legal Name], of [Shareholder 2 Address]
(each a "Shareholder" and together the "Shareholders"; the Corporation and the Shareholders are together the "Parties")
This template assumes two Shareholders for readability. If there are more than two, replicate the parties block and the signature block for each additional Shareholder, and adjust Schedule A accordingly.
WHEREAS the Shareholders own all of the issued and outstanding Shares of the Corporation, and the Parties wish to record their agreement as to the governance of the Corporation and their respective rights and obligations as Shareholders;
NOW THEREFORE in consideration of the mutual covenants below, the Parties agree as follows:
Interpretation
In this Agreement:
"Board" means the board of directors of the Corporation;
"Fair Market Value" means the value of a Share, determined under section 14;
"Offer Notice" has the meaning given in section 10.1;
"Permitted Transferee" means, in respect of a Shareholder who is an individual, [that Shareholder's spouse, child, or a trust for their benefit / a corporation Controlled by that Shareholder];
"Shareholder" means a holder of Shares who is a party to this Agreement, and "Shareholders" means all of them;
"Shares" means the issued and outstanding shares in the capital of the Corporation, of every class; and
"Triggering Event" has the meaning given in section 13.1.
The recitals and Schedules form part of this Agreement.
Purpose and Share Capital
The Corporation is incorporated under [the Canada Business Corporations Act / the Business Corporations Act of [Province]].
This is a preview. The full template is free on GitLaw.
About this template
What is this template?
This is a governance document for private Canadian companies that regulates the relationship between owners and the corporation. It includes specific mechanics for 'Shotgun' buyouts, 'Tag-Along' exit rights, and mandatory transfers upon a 'Triggering Event' such as death or bankruptcy. It is not suitable for public corporations or entities operating under the civil law of Quebec.
When should you use it?
Use this document when two or more parties own shares in a Canadian private company and wish to define board nomination rights and share transfer restrictions. If the corporation is located in Quebec, a civil-law specific agreement should be used instead.
What's inside
| Clause | Name | What it does |
|---|---|---|
| 1 | Interpretation | Defines key terms including Board, Fair Market Value, Offer Notice, Permitted Transferee, and Triggering Event. |
| 2 | Purpose and Share Capital | Identifies the governing corporate statute and specifies whether the agreement restricts directors' powers as a unanimous shareholders agreement. |
| 4 | Board of Directors | Establishes a minimum shareholding percentage for director nomination rights and defines quorum requirements for board meetings. |
| 5 | Matters Requiring Shareholder Approval | Lists specific corporate actions, such as amending bylaws or incurring significant debt, that require a defined approval threshold. |
| 8 | Pre-emptive Rights | Obliges the Corporation to offer existing Shareholders a proportionate share of new issuances before offering them to third parties. |
| 10 | Right of First Refusal | Requires a selling Shareholder to offer their shares to other Shareholders before completing a transfer to a third party. |
| 11 | Shotgun (Buy-Sell) Provision | Permits one Shareholder to initiate a mandatory buyout where the recipient must either buy the offeror's shares or sell their own. |
| 12 | Tag-Along and Drag-Along Rights | Grants minority shareholders exit rights during a majority sale and allows majority holders to force a total sale. |
| 13 | Mandatory Transfer on Death, Disability, Bankruptcy or Termination | Triggers a mandatory share purchase by the Corporation or remaining Shareholders at Fair Market Value upon specific personal events. |
| 16 | Non-Competition and Non-Solicitation | Restricts Shareholders from competing with the Corporation's business or soliciting clients for a specified number of months after exit. |
Who it's for
- shareholders of a private Canadian corporation incorporated federally or in a common-law province
- a corporation requiring a statutory unanimous shareholders agreement to shift board powers to shareholders
- business owners establishing exit mechanics like shotgun clauses or drag-along rights
- Canadian corporations needing a dividend policy and pre-emptive rights framework
How long it runs and how it's signed
How long
Runs until someone ends it
Survives the end
Mandatory Transfer on Death, Disability, Bankruptcy or Termination, Valuation, Non-Competition and Non-Solicitation, Confidentiality
Signed by
Corporation Legal Name, Shareholder 1 Legal Name, Shareholder 2 Legal Name
Witness
Not required
Notarisation
Not required
Law it's drafted under
Governed by
Canada Business Corporations Act, R.S.C. 1985, c. C-44
Governed by
Business Corporations Act, R.S.O. 1990, c. B.16
Governed by
Business Corporations Act, S.B.C. 2002, c. 57
Governed by
Business Corporations Act, R.S.A. 2000, c. B-9
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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