Shareholder Agreements

A shareholder agreement is not a mandatory requirement, as per legal regulations. A corporation can operate under the provisions outlined in the applicable corporation statute, its articles of incorporation, and by-laws. However, many shareholders find this "default" arrangement unsatisfactory. For instance, minority shareholders may be reluctant to relinquish their decisions entirely to the majority when critical corporate matters arise. Conversely, majority shareholders might wish to have the authority to compel minority shareholders to sell their shares to a third party interested in acquiring the entire share capital of the corporation. In essence, a shareholder agreement is a tool to ensure that each shareholder's interests and investments in the corporation are treated fairly, in accordance with mutually agreed-upon rules.