MIDTERM NOTES - The main goals of Ordinary Shareholderss...

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The main goals of Ordinary Shareholders’s Agreement:     1. Maintaining proportional shares ownership between the shareholders ;     2. Maintaining the "closed" nature of the corporation by preventing third parties from buying  into the corporation without the other Shareholders’assent;     3. Protecting minority shareholders from prejudice caused by the decisions and actions of the  majority shareholder; 4. Preventing conflict between the shareholders by providing for conflict-resolution  mechanisms; The reasons to have a S/H agreement: : - avoid misunderstanding : - prepare for future success or failure : - prepare for possible 3rd-party intrusion rights of first refusal In general, a shareholders’ agreement  provides from free disposal of shares by shareholders.  By example, it could be foreseen that shareholders be granted a right of first refusal therefore  enforcing a selling shareholder to offer his shares to the other shareholders prior to a third party.  The Unanimous Shareholders’Agreement The  Business Corporations Act (federal ) as well as  the Companies Act (Quebec)  allow  corporations and shareholders to enter into a unanimous Shareholders’agreement. More than  simply managing the relationship between shareholders as does the ordinary  Shareholders’agreement, the USA allows shareholders  to limit, in whole or in part, the Board of  Directors’ powers  by  transferring  some of the Directors’ powers, duties and responsibilities  directly  to shareholders . As a requirement for its validity, a unanimous Shareholders’ agreement must be  signed by all  shareholders  of the corporation. The USA can bind any future shareholder without needing the 
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unanimous agreement to be signed by that new shareholder, granted that every share  certificate acquired  bears a notice of the existence of a the USA . Many of the following Directors’ duties are generally transferred to shareholders in the scope of  a unanimous agreement: declaration of dividends, issuance and redemption of shares,  Directors’ and officers’ remuneration, election of officers, decision to enter into a deed of loan,  amendment to the corporation’s general by-laws, etc.   Arbitration clauses: valuation of shares   Drag-along provision force other s/h to sell shares to existing s/h Adoption Agreement: new buyers of shares must adopt the principles on USA to be eligible to be the s/h Quorum Minimal representation of SH required to start a meeting - not required that quorum be maintained  throughout the meeting to pass resolutions unless otherwise provided. Absence of quorum leads to  adjournment. Unless a quorum of shareholders is present or represented at annual or special shareholders’ 
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MIDTERM NOTES - The main goals of Ordinary Shareholderss...

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