Kahane Law Office

JEFF KAHANE Founding Lawyer of Kahane Law Office

THE LAW FIRM WITH MORE THAN THEIR FAIR SHARE OF FRIENDLY FACES

EXCEPTIONAL SERVICE, KNOWLEDGEABLE LAWYERS WHO CARE and reasonable flat rates have allowed Kahane Law Office to blossom from a solo concentration in Real Estate Law to a full-service law firm providing legal assistance in the areas of Real Estate Law, Civil and Commercial Litigation, Employment/ Labour Law, Wills and Estates, Powers of Attorney, Corporate Services, Criminal Law, Family Law, and Uncontested Divorces and Immigration Law in Calgary, AB.

We apply our dedicated client approach to each case and are proud to offer low flat rate legal fees for the majority of our real estate services. Our friendly, 16 knowledgeable lawyers and staff take pride in our high customer satisfaction ratings. Kahane Law Office has claimed the status of being on Top of our competition because we consistently strive for excellence within our company and wish nothing less for yours. Continue reading for useful information for your business.

COMPANIES WITH MORE THAN ONE SHAREHOLDER NEED SHAREHOLDER AGREEMENTS!

Shareholder agreements are contracts between two or more shareholders that govern the relationship between shareholders by defining the rights and obligations of each shareholder regarding the management of the corporation and the transfer of its shares. The following are eight reasons why a company should have a shareholders’ agreement:

1) PREVENTION OF LEGAL DISPUTES

When a business relationship begins, they envision a long-term relationship of cooperation and trust. Unfortunately, disputes are bound to arise which can lead to litigation, that is time-consuming, expensive, and harmful to a business. A shareholders’ agreement provides a mechanism and framework for shareholders of a corporation to effectively deal with any disputes that arise between the shareholders without proceeding to court.

2) RESTRICTIONS ON THE TRANSFER OF SHARE

Shareholder agreements can prevent shares from being sold and transferred to individuals that are either unknown or have undesirable qualities for current shareholders. These restrictions allow existing shareholders to participate in new offerings and approve new or replace partners of the business that were never contemplated at beginning of the business relationship. One mechanism that is typically in place to protect the interests of both the selling shareholder and remaining shareholders is a “right of first refusal”. A right of first refusal allows a shareholder to sell their shares to a third party, but only if they first offer the same terms to existing shareholders.

3) RESTRICT THE POWER OF DIRECTORS

Typically, the business decisions of the corporation are left to the board of directors. In a shareholders’ agreement, shareholders can limit a director’s discretion. This mechanism provides

"Shareholder agreements can protect the corporation by implementing clauses that protect the intellectual property of the corporation."

Shareholders of the corporation with greater control over the day to day operations of the corporation.

4) EXIT STRATEGY FOR SHAREHOLDERS

Shareholders may want to exit a corporation for numerous reasons such as retirement, they want to cash out their investment, they simply no longer want to be involved with the corporation or they no longer see eye to eye with the remaining shareholder. A shareholders’ agreement can define the procedure of how a shareholder may exit a corporation. Examples include; a. Shotgun Clause: Allows a shareholder to offer to buy the shares of the other shareholder or to sell their own shares at a specific price. The non-offering shareholder elects either to buy or sell the shares. b. Put Option Clause: A shareholder can force the corporation or other shareholders to buy them out. c. Call Option Clause: The Corporation or shareholder can purchase the shares of a shareholder at any time or after the occurrence of an event.

5) SHAREHOLDER AGREEMENTS PROTECT MINORITY SHAREHOLDER

A Shareholders’ agreement can provide protection and rights to minority shareholders they may not otherwise have and are used to prevent them from being 17 adversely prejudiced by majority shareholders. Examples of rights include; a. A right to proportionate representation on the board; b. The ability to veto fundamental changes to a corporation; and c. The requirement of minority shareholder consent regarding any major decision of the corporation.

6) MAJORITY SHAREHOLDER PROTECTION

When a majority shareholder wishes to sell his shares to a third party and exit the corporation, a third party may request that all the shares of the corporation be sold to complete the transaction. In order to provide the majority shareholder with an exit strategy, a shareholders’ agreement can provide the majority shareholder with a drag along right. It can require the minority shareholders to sell their shares to the buyer as well, allowing a majority shareholder to exit the corporation without a minority shareholder blocking the sale.

7) CONFIDENTIALLY, NONSOLICITATION OR NONCOMPETITION CLAUSE

Shareholder agreements can protect the corporation by implementing clauses that protect the intellectual property of the corporation, prevent the solicitation of clients and employees by current and departing shareholders. Further, shareholder agreements can prevent departing shareholders from competing with the corporation.

8) POLICIES REGARDING DIVIDENDS

Shareholder agreements can set out the specific terms as to when or if dividends will be issued. There are many shareholder disputes that arise from this decision. Further, so that all shareholders are treated evenly, regardless of the shareholder class shares they hold, the dividend policy can maintain fairness among all shareholders.

Voted Top Choice Real Estate Law Firm of 2020 in Calgary.

(403) 225-8810 7309 Flint Road SE Calgary, AB

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