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.
5.0 out of 5 on Google
Read reviewsAs seen in
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
Law it's drafted under
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.
Frequently asked questions
A template isn't binding on its own - like any contract, it becomes binding once it's properly completed and signed. Templates in our curated library are professionally drafted for US or UK law; review any template before you sign it.
Yes. Chat with GitLaw to edit any section, or make changes directly in the editor.
Yes, read about team plans here.
Describe what you need in the chat and GitLaw will draft it for you.
Templates in our curated library are professionally drafted for US or UK law. The wider library comes from the GitLaw community and public sources - a solid starting point, but check any template fits your situation before you rely on it.
Mostly US and UK law. Some templates use general commercial terms that work across jurisdictions, and many note which law they're written for.
It depends on the situation. Templates work well for routine business agreements. For anything involving significant money, complex IP, employment, or areas you're unsure about, it's worth getting professional advice before you sign. GitLaw provides templates and tools, not legal advice.
Open any template in GitLaw and describe the change you want in the chat — 'make clause 4 mutual' or 'add a 30-day notice period', for example. GitLaw drafts the revised language and shows it as a suggested edit. You accept, reject, or keep editing from there.
Yes. Upload a Word, PDF, or Markdown file and GitLaw will open it in the editor. You can review, edit, or chat with GitLaw about it the same way you would with any template from the library.
Trusted by 5,000+ businesses
From template to signed, in one place
Every template opens in an editor with an AI agent alongside it.
Open
Pick a template and open it. Nothing to download, and no credit card to start.
Free to open
Edit with AI
Describe your situation in chat and the agent adapts the wording, clause by clause.
Tracked changes you can review
Send and sign
Share it for negotiation, then collect signatures without leaving GitLaw.
eSign included
Built for your legal work,
with practicing lawyers
Trained on 5,500+ clauses and specialist areas of law. Built with a standards committee of independent lawyers.
As seen in
Ready to get started?
No sales calls, no credit card. Just chat with GitLaw.
GitLaw provides templates and tools, not legal advice. Templates are a starting point, not a substitute for advice on your situation - for anything significant, speak to a qualified lawyer.