Majority Shareholder Objectives and Legal Protections

Contact Neufeld Legal PC at 403-400-4092 / 905-616-8864 or Chris@NeufeldLegal.com

Advancing and protecting your legal rights as a major corporate shareholder.

"All shareholders are not created equal." Being a majority shareholder or one of the key shareholders intended to have a significant role over the business, you should be looking to clearly determined your rights in the corporation relative to those of the other shareholders (in particular minority shareholders). For it is at the outset that you possess for greatest leverage with which to dictate for rights and limitations of minority shareholders.

Although the corporations articles of incorporation and by-laws provide some rules with respect to the relative rights of different shareholders, they are largely insufficient to protect majority shareholders and their greater investment in the company. As such, majority shareholders need to look to a unanimous shareholders agreement to provide both corporate operational direction and majority shareholder protections. Without such an agreement, majority shareholders will find themselves in very precarious financial and/or legal situations in the future. Therefore, it is incumbent upon majority shareholders that an appropriate unanimous shareholder agreement be entered into at the earliest possible phase in the corporation's existence when there is to be more than a single shareholder. To do otherwise, is to beckon for serious legal and financial trouble in the future.

Majority shareholders must remember that their junior partners will not always be their best allies. Although the minority shareholders may initially appear to be highly cooperative, this can change rapidly for any number of reasons (change in business economic conditions, change in personal attitudes, change in personal financial situation, differences in the corporation's business direction, failure to make further contributions to the advance of the business, impeding the corporation from obtaining further outside investment, etc.). As such, majority shareholder will want to exercise his or her control over the corporation in a pre-determined manner, which is best undertaken with a well written shareholders agreement.

For knowledgeable and experienced legal representation in advancing your prospective or current shareholdings, while protecting your position as a shareholder, contact us at 403-400-4092 [Alberta], 905-616-8864 [Ontario] or Chris@NeufeldLegal.com.

What is a Unanimous Shareholders Agreement?

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