Shareholder agreement, what a CPA checks
A shareholders agreement settles what happens between owners when something changes. We are a CPA firm, not a law firm, so we do not draft or sign off on the agreement itself. What we do check is the money inside it. How a share is valued, how a buy-out is funded, how dividends are declared, and what each clause costs in tax. This guide sets out what to settle before you sign, and where a lawyer is needed instead. Open Corporation for $35 is a department of Gondaliya CPA.
What a shareholders agreement does
The articles of incorporation say what shares exist. A shareholders agreement says what the people holding them have agreed between themselves, and it is a private contract rather than a registry filing.
A unanimous shareholders agreement goes further. Signed by every shareholder, it can move powers that normally sit with the directors into the hands of the shareholders, and it binds anyone who later acquires those shares.
Most of an agreement is about events nobody expects at the start. One owner wants out, one stops working, one dies, one wants to sell to a competitor, or the two of them simply stop agreeing.
We are a CPA firm and not a law firm. We do not draft shareholders agreements and nothing on this page is legal advice. Our disclaimer sets out what we do and do not provide.
When you need one
A single-shareholder corporation does not need an agreement, because there is nobody to agree with. Everything below changes that answer.
| Situation | Do you need an agreement | Why |
|---|---|---|
| One owner, one class of shares | No | There is no second party, and the articles do the work |
| Two owners at 50 and 50 | Yes | Neither can pass a resolution alone, so a deadlock clause is the only way out |
| Two owners where one is silent | Yes | The working owner needs a rule for what happens if the silent one stops funding |
| Family members holding non-voting shares | Usually | It records that the shares are not to be sold outside the family |
| An outside investor | Yes | The investor will require one, and will usually supply the first draft |
| A holding company owned by two families | Yes | Two layers of ownership mean two sets of interests to reconcile |
The agreement is signed after incorporation, once the shares have been issued. It does not delay the filing, and it does not change the articles unless the shareholders also amend them.
The clauses a CPA checks
A lawyer drafts the agreement. The clauses below decide how much money changes hands and when tax falls due, which is where our review sits.
How a share is valued
The valuation clause is the one that causes most of the later argument. A fixed formula such as a multiple of earnings is cheap and predictable. An independent valuation at the time of the event is fairer and costs more.
What matters is that the method is written down and that both owners understand what it produces. A clause saying fair market value with no method attached settles nothing on the day it is needed.
How a buy-out is funded
Agreeing a price is only half the clause. The other half is where the money comes from, because a buy-out funded from the corporation and a buy-out funded personally have different tax outcomes for both sides.
A buy-out with no funding mechanism leaves the remaining owner borrowing against a business that has just lost half its management. Insurance, a vendor note or a staged payment schedule all belong in the drafting instructions.
How dividends are declared
Two owners holding the same class are paid pro rata, whatever their drawings have been. Where owners intend to be paid differently, the share classes have to support it, and that is a structure question rather than a drafting one.
Which classes allow unequal dividends, and who should hold each one, is covered in our guide to share structure for a new corporation.
Exit mechanics, including the shotgun clause
Exit clauses are the machinery that lets one owner leave without a court. Each one suits a different balance of power between the owners.
| Clause | How it works | What a CPA watches for |
|---|---|---|
| Right of first refusal | A shareholder who wants to sell must offer to the others first | Whether the price offered to insiders is the same as the outside offer |
| Shotgun | One owner names a price. The other must either buy at that price or sell at it | It favours whoever can raise money fastest, not whoever is right |
| Tag-along | If the majority sells, the minority can join the sale on the same terms | That the minority is not left holding shares in a company with a new owner |
| Drag-along | If the majority sells, the minority can be required to sell too | That the price and the tax treatment are the same for both |
| Deadlock | A defined process when the owners cannot agree | That it ends somewhere, rather than in mediation with no final step |
A shotgun clause is often described as fair because either side can trigger it. In practice it rewards the owner with access to cash, so it suits two owners of similar means and rarely suits an uneven pair.
Death, disability and how a buy-out is paid for
These are the clauses owners skip and the clauses that get used. A death or a long illness forces a transfer of shares at the worst possible moment for the business.
Corporate owned life insurance is the usual funding answer. The corporation holds a policy on each owner, and the proceeds are used to buy the deceased owner's shares from the estate.
The tax treatment of those proceeds, and of the redemption that follows, is detailed and depends on how the policy and the clause are set up together. That is a conversation for your CPA and your lawyer in the same room.
An agreement that promises the estate a buy-out with no policy behind it is a promise the surviving owner may not be able to keep. The funding and the clause have to be drafted together.
Where a lawyer is needed instead
The line is not blurred. Anything that creates a legal obligation between the owners is drafted by a lawyer, and anything that changes the money or the tax is reviewed by us.
| Work | Who does it |
|---|---|
| Drafting and signing off the shareholders agreement | A lawyer |
| Advising on enforceability, or on a dispute already running | A lawyer |
| Preparing and filing the articles and the share provisions | Us, for $35.00 plus the government fee |
| Checking the valuation method and the funding of a buy-out | Us |
| Modelling the tax on a dividend, a redemption or a sale of shares | Us |
| Independent legal advice for each shareholder before signing | A separate lawyer for each owner |
Which parts of setting up a corporation need a lawyer and which do not is set out in our comparison of incorporating with a CPA against a lawyer.
What the corporation itself costs
We charge for the incorporation, not for the agreement. The table below is what the corporation costs to set up, and what sits outside our fee.
| Item | Amount | HST | Total | Who charges it |
|---|---|---|---|---|
| Our fee. We prepare and file the articles, the share classes and the first director details | $35.00 | Included | $35.00 | Open Corporation for $35, a department of Gondaliya CPA |
| Government fee, articles of incorporation filed online under the CBCA | $200.00 | Not applicable | $200.00 | Corporations Canada |
| Government fee, articles of incorporation filed online under the OBCA | $300.00 | Not applicable | $300.00 | Ontario Business Registry |
| Drafting the shareholders agreement | Set by the lawyer you instruct | Not applicable | Set by the lawyer you instruct | A law firm, not us |
| Independent legal advice for each shareholder | Set by each lawyer | Not applicable | Set by each lawyer | A law firm, not us |
| Total, federal corporation, standard online filing | $235.00 | Included in our $35.00 | $235.00 | Combined |
| Total, numbered Ontario corporation | $335.00 | Included in our $35.00 | $335.00 | Combined |
Our fee includes HST. Government fees are passed through at cost and shown as their own line on your invoice. These registry fee schedules were last checked on 7 September 2026. Every figure is on our full pricing page.
Two owners, and no agreement yet
We will tell you what to settle before you instruct a lawyer.
Shareholders agreement questions, answered
Do I need a shareholders agreement?
Not if you are the only shareholder. With two or more owners you do, because the articles say nothing about what happens when one wants out. It is a private contract, not a registry filing. Ask us what to settle at your free consultation.
Can you draft the agreement for me?
No. We are a CPA firm, not a law firm, so drafting and signing off the agreement is a lawyer's work. We review the valuation method, the buy-out funding and the tax consequences. Our disclaimer sets out the boundary.
What is a unanimous shareholders agreement?
One signed by every shareholder. It can transfer powers that normally belong to the directors to the shareholders themselves, and it binds anyone who later acquires those shares. A lawyer decides whether your agreement should take that form.
What is a shotgun clause?
One owner names a price per share. The other must then either buy at that price or sell at it. It resolves a deadlock quickly and it favours the owner who can raise cash fastest, so it suits two owners of similar means.
How should the agreement value a share?
By a method written into the clause, either a formula such as a multiple of earnings or an independent valuation at the time. Fair market value with no method attached settles nothing. We check that the method produces a number both owners can live with.
What happens if a shareholder dies?
The shares pass to the estate unless the agreement says otherwise. Most agreements require the corporation or the surviving owners to buy them, funded by a corporate owned life insurance policy. The clause and the policy have to be set up together.
Does the agreement change my articles of incorporation?
No. The articles are filed with the registry and are public. The agreement is private and sits alongside them. If the agreement needs a share class the articles do not have, the articles are amended as well. See our share structure guide.
When should the agreement be signed?
After incorporation and after the shares are issued, which in practice means in the first weeks. It does not hold up the filing. We incorporate for $35.00 plus the government fee and you instruct a lawyer in parallel. Get started for $35.
Do both owners need their own lawyer?
Each owner should take independent legal advice before signing. One lawyer cannot act for both sides of an agreement that may later be used by one against the other. Each lawyer sets their own fee. Our CPA against lawyer comparison explains the split.
Is a template agreement good enough?
A template tells you which clauses exist, which is useful preparation. It does not know your valuation method, your funding or your tax position, and those are the clauses that get used. Bring the template to us and we will mark up the money clauses before you instruct a lawyer.
Reviewed by a CPA team
| Who | Role | Phone | |
|---|---|---|---|
| Sharad Gondaliya, CPA | Principal | 647-212-9559 | sharad@gondaliyacpa.ca |
| Vandana Goel, CPA | Accounting Specialist | 647-250-0242 | vandana@gondaliyacpa.ca |
Open Corporation for $35 is a department of Gondaliya CPA, a firm registered with CPA Ontario under registration 61330051. Fully licensed CPA Ontario. 1300+ Google reviews. 30-day money-back guarantee. 60-day fees-matching policy.
We are a CPA firm and not a law firm. This guide is general information, it is not legal advice, and it is not a legal opinion on any agreement or clause. Drafting, signing off and advising on a shareholders agreement is a lawyer's work. See our disclaimer.
Know what to settle before you instruct a lawyer
We incorporate for $35.00, HST included, with the government fee at cost, and we review the money clauses in your agreement.
