Do you need a Shareholder’s Agreement?

Posted on December 28, 2011 by admin | Posted in Tax Tips

If your corporation has multiple shareholders, it is recommended that you consider establishing a shareholders agreement. This agreement usually sets out certain rights and responsibilities of the shareholders and specifies what will happen in the event of the death or disability of a shareholder. It may also cover what happens to the shares by a shareholder who goes bankrupt or suffers a marital breakdown.

A shareholders’ agreement will normally contain a formula or process for calculating the purchase price (fair market value) of the shares. A shareholders’ agreement will help to ensure a smooth transition of your business, it can alleviate shareholder disputes, and it can be an important element in your overall tax-planning.

Please contact your local DJB office for further assistance with this or any other matter.