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Your business and your will – Shareholders’ agreements

shareholders' agreementIf you have a business with a few shareholders, you may have a Shareholders’ Agreement in place. This forms part of your estate planning whether you like it or not. A Shareholder’s Agreement is most commonly used where there are multiple, unrelated shareholders. It addresses governance and division of profits of course, but it may (and should) also address what happens if one shareholder passes away.

Is there a buyback of that shareholder’s shares upon death which allows the family members to receive cash for the shares? That way, the remaining shareholders maintain control over who is a shareholder – they may not want to suddenly be running a business with the late shareholder’s estranged brother, for example.

A Shareholders’ Agreement is a very important component of any business owner’s succession plan.

By Vanessa Dedominicis, Pushor Mitchell

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In addition to our regular guest bloggers, Inside Internal Controls blog published by First Reference, provides occasional guest post opportunities from various subject matter experts on the topics of risk management and best practices in finance and accounting, information technology, environmental issues, corporate governance, sales/marketing and operations, not-for-profits and business related issues in Canada. If you are a subject matter expert and would like to become an occasional blogger, please contact Yosie Saint-Cyr at editor@firstreference.com. If you liked this post and would like to subscribe to Inside Internal Controls blog click here.
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