A Unanimous Shareholder Agreement is a written agreement to which all shareholders of a corporation are or are deemed to be parties to. These agreements clearly lay out powers and restrictions for shareholders that they all have agreed to. Typically, the powers and restrictions under a Unanimous Shareholder Agreement will focus primarily on decision making and share transfer rights. A Unanimous Shareholder Agreement or USA as it is often called, allows for the transfer of all or some of the rights, powers, duties and liabilities of the directors to the shareholders of the corporation. The advantage of such an agreement is that they contemplate certain circumstances in advance and provide mechanisms and procedures to govern how the circumstances will play out. For example, what will happen to the shares of a deceased shareholder? In this manner, Unanimous Shareholder Agreements provide value by fostering predictability in the governance of the corporation. With greater predictability, means a lower likelihood of conflict, and a greater focus on the actual business of the corporation rather than governance issues for shareholders. Examples of decision making provisions may include: – methods for selection and removal of directors to the board; – establishing minimum and maximum numbers of directors on the board; – guaranteeing certain shareholders a position on board; and – stipulating matters that will require unanimous approval, or other approval beyond a simple majority of the directors. Examples of common share transfer provisions may include: • Right of first offer – Existing shareholders get an opportunity to purchase shares from a selling shareholder before any third-party offers are solicited; • Right of first refusal – Existing shareholders get an opportunity to match any third-party offers to buy shares; • Shotgun – Often in the context of a dispute, a shareholder may offer a price per share to purchase all the shares of another shareholder, in which case the offeree can either accept the offer or offer to buy all of the offeror’s shares on the same terms; • Tag-along – If a majority shareholder sells their shares, a minority shareholder may participate in the sale on the same terms; and • Drag-along – If a majority shareholder sells their shares, they can force minority shareholders to sell their shares too. Questions: For any questions about Unanimous Shareholder Agreements, or other corporate and commercial matters, please contact Jesse Zelisko Disclaimer: this is not intended to act as legal advice and is for information purposes only.