Incorporation Guide · Shareholder Agreements
Shareholder agreement, what a CPA checks
This page sets out what two or more owners should settle before a shareholder agreement is signed, and where a lawyer is needed instead of us. We are a firm of Chartered Professional Accountants and not a law firm, so we do not draft the agreement. We check the money inside it: how a share is valued, how a buy-out is funded and what each clause costs in tax. We prepare and file your articles of incorporation for $35.00, HST included, with the government fee charged at cost. Open Corporation for $35 is a department of Gondaliya CPA.
What a shareholder agreement does
The articles of incorporation say what shares exist. A shareholder agreement says what the people holding them have agreed between themselves, and it is a private contract rather than a registry filing. A unanimous shareholder 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 the document deals with 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.
An agreement is only as good as the day it is used. A clause that reads well and produces a number neither owner can fund is the most common failure we see in agreements brought to us for review.
When you need one and when you do not
A single-shareholder corporation needs no agreement, because there is nobody to agree with. Every other ownership pattern changes that answer.| Situation | Is an agreement needed | 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 |
| Three or more working owners | Yes | A majority can outvote one owner, and the minority needs protection written down |
| 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 clauses a CPA checks
A lawyer drafts and signs off the agreement. The three 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 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 by 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 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 matches 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 under 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 for when the owners cannot agree | That it ends somewhere, rather than in mediation with no final step |
Death, disability and how the 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, 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. Anything that changes the money or the tax is reviewed by us.| Work | Who does it |
|---|---|
| Drafting and signing off the shareholder agreement | A lawyer |
| Advising on enforceability, or on a dispute already running | A lawyer |
| Independent legal advice for each shareholder before signing | A separate lawyer for each owner |
| 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 |
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 incorporation service fee. We prepare and file the articles of incorporation, the share provisions and the first director details | $35.00 | Included | $35.00 | Open Corporation for $35, a department of Gondaliya CPA |
| NUANS report, named corporations only | $25.00 | Included | $25.00 | 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 shareholder 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, named federal corporation, standard online filing | $260.00 | Included in our fees | $260.00 | Combined |
| Total, named Ontario corporation, standard online filing | $360.00 | Included in our fees | $360.00 | Combined |
Our $35.00 fee includes HST and our $25.00 NUANS fee includes HST. Government fees are passed through at cost with no mark-up. These registry fee schedules were last checked on 7 September 2026. The full list is on our full pricing page.
Two owners, and no agreement yet
We will tell you what to settle before you instruct a lawyer.What a CPA checks before you sign
A draft agreement arrives with the legal machinery already in place. What it usually lacks is a number anyone has tested against the corporation's own figures. These are the points we work through with you, in this order, before the draft goes back to the lawyer.- The valuation method, run against the last two years of financial statements to see what it actually produces.
- Whether the corporation could fund that number today, and what it would have to borrow if it could not.
- Whether the buy-out is structured as a share purchase by the other owner or a redemption by the corporation, because the tax differs.
- Whether the insurance in place matches the obligation the clause creates.
- Whether the dividend provisions can be followed with the share classes the articles already allow.
- Whether a departing owner's shares would qualify for the lifetime capital gains exemption on a sale, and what the clause does to that.
- Whether dividends to a family shareholder survive the tax on split income rules.
Frequently asked questions
These are the questions owners ask before they instruct a lawyer. Each answer carries the figure, the rule or the boundary that makes it true, so it can be read on its own without the rest of the page around it.Do I need a shareholder agreement?
A single-shareholder corporation needs no agreement, because there is nobody to agree with. With two or more owners you do, because the articles of incorporation say nothing about what happens when one owner wants out, stops working or dies. The agreement is a private contract between the shareholders rather than a registry filing, so nothing about it is public. It is signed after incorporation, once the shares have been issued.
Can a CPA firm draft my shareholder agreement?
No. Gondaliya CPA Professional Corporation is a firm of Chartered Professional Accountants licensed by CPA Ontario under firm registration number 61330051, and it is not a law firm. Drafting the agreement, signing it off and advising on whether it is enforceable is a lawyer's work. We review the valuation method, the funding of a buy-out and the tax consequences of each clause, which is the part a law firm will ask you about.
What is a unanimous shareholder agreement?
A unanimous shareholder agreement is one signed by every shareholder of the corporation. It can transfer powers that normally belong to the directors to the shareholders themselves, and it binds anyone who later acquires those shares. That makes it stronger than an ordinary agreement between some of the owners. Whether your agreement should take that form is a question for the lawyer who drafts it.
What is a shotgun clause?
A shotgun clause lets one owner name a price per share, after which the other owner must either buy at that price or sell at it. It resolves a deadlock quickly and without a court. It also favours the owner who can raise cash fastest rather than the owner who is right. That suits two owners of similar means and rarely suits an uneven pair. We model both outcomes before you agree to one.
How should the agreement value a share?
By a method written into the clause, which is either a formula such as a multiple of earnings or an independent valuation at the time of the event. A clause saying fair market value with no method attached settles nothing on the day it is needed. We run the proposed method against the last two years of financial statements so both owners can see the number it produces before they sign.
What happens to the shares if a shareholder dies?
The shares pass to the deceased owner's 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 taken out on each owner. 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 clause and the policy are set up together.
Does a shareholder agreement change my articles of incorporation?
No. The articles are filed with the registry and are a public document. 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. That takes a special resolution of the shareholders and a government fee of $200.00 federally. The share register is updated at the same time.
When should the agreement be signed?
After incorporation and after the shares have been issued, which in practice means within the first weeks. It does not hold up the filing, so the corporation can be incorporated and the agreement instructed in parallel. We file the articles for $35.00 with HST included, plus the government fee of $200.00 federally or $300.00 in Ontario, charged at cost.
Do both owners need their own lawyer?
Each owner should take independent legal advice before signing. One lawyer cannot properly act for both sides of an agreement that may later be used by one owner against the other, and each lawyer sets their own fee. The agreement itself usually records that independent legal advice was obtained. We work alongside both lawyers on the figures rather than on the drafting.
Is a template shareholder agreement good enough?
A template tells you which clauses exist, which makes it useful preparation before a first meeting with a lawyer. It does not know your valuation method, your funding, your share classes 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, then a lawyer drafts and signs off the document itself.
Why owners trust the filing to us
Gondaliya CPA Professional Corporation is registered with CPA Ontario under firm registration number 61330051. Our clients have left us 1,300+ five-star Google reviews, and we work from 13 Ontario offices, open 9:00 AM to 8:30 PM, Monday to Sunday. We back every filing with a 30-day money-back guarantee and a 60-day fee-matching policy, and we are a Xero Partner Award Winner 2026. The platform is operated by WealthBamboo Inc., a federal corporation. Open Corporation for $35 is a department of Gondaliya CPA.
Ready to incorporate
Send the intake form and we will confirm your share structure, tell you what to settle with your co-owner and set out the figures your lawyer will need. Our fee is $35.00, HST included, and the government fee is shown separately at cost. Payment is by Interac e-Transfer to info@gondaliyacpa.ca, and the security question is Not Applicable because auto-deposit is enabled.Registered CPA Ontario 61330051
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No legal advice
Gondaliya CPA Professional Corporation is a firm of Chartered Professional Accountants licensed by CPA Ontario, firm registration number 61330051. It is not a law firm. We prepare and file corporate documents and we provide accounting and tax advice. Nothing on this page is legal advice, and reading it creates no solicitor and client relationship. For legal advice, including advice on a shareholder agreement before you sign it, consult a lawyer licensed in the province where your corporation carries on business.
