Quick Answer

Joint ownership of a company does not necessarily mean equal expectations among the shareholders. Each shareholder may have different views about decision-making, control, compensation, financing, or when to sell the business. A unanimous shareholder agreement (USA) sets out the guiding framework for the company that all shareholders agree upon before those differences in views become disputes.

What the agreement does

A shareholders’ agreement sets contractual rules among owners about governance, decision-making, financing, transfers and exits. A unanimous shareholders agreement can also transfer specified powers and responsibilities from directors to shareholders under Alberta corporate law, which is why drafting must be deliberate.

Preventing deadlock

Two equal owners can reach a stalemate over hiring, financing, expansion, dividends or the sale of the company. A well-designed agreement can define reserved matters, voting thresholds, escalation procedures, mediation or other deadlock mechanisms before the relationship deteriorates.

Planning for exits

Owners eventually leave because of retirement, disability, death, disagreement or a new opportunity. Transfer restrictions, rights of first refusal, buy-sell mechanisms, valuation processes and payment terms can reduce uncertainty. Insurance and estate planning may also be connected to a shareholder’s death or disability.

Minority and majority concerns

Majority owners often want room to operate the company efficiently, while minority shareholders want protection from being excluded, diluted or treated unfairly. Information rights, board representation, pre-emptive rights, tag-along rights and carefully drafted drag-along rights can balance these interests.

The best time is before the dispute

The easiest time to negotiate a shareholder agreement is when the owners are aligned. Waiting until a relationship has broken down turns a planning exercise into a dispute. Calgary and Strathmore businesses with family ownership or a small number of active shareholders can be especially vulnerable to personal conflict spilling into corporate governance.

Frequently Asked Questions

1. What is a unanimous shareholder agreement?

A unanimous shareholder’s agreement (“USA”) is a written agreement involving all shareholders that establishes rules for their relationship and the corporation’s governance. In Alberta, it can regulate shareholder rights and liabilities, the election of directors, and management of the corporation, including restricting directors’ powers. 

2. We own the business equally. Why do we need an agreement?

Equal ownership does not necessarily mean equal expectations. You may have different views about decision-making, workloads, compensation, financing, or when to sell the business. A unanimous shareholder agreement (USA) records the rules you both accept before those differences become disputes.

3. If we trust each other, why put anything in writing?

An agreement protects the relationship rather than replacing trust. Discussing difficult issues while you are on good terms helps identify misunderstandings and establish fair expectations. It is generally easier to agree on a process before either shareholder has a personal interest in its outcome.

4. What happens if we cannot agree on an important decision?

A 50/50 ownership structure creates a risk of deadlock where neither shareholder has enough votes to approve a disputed matter. Depending on the corporation’s governance arrangements, this can prevent important decisions from being made.

A USA can establish a staged process—such as negotiation, mediation, and ultimately a buyout or sale mechanism—so disagreement does not leave the business indefinitely stalled.

5. Should every business decision require both shareholders’ approval?

Not necessarily. Requiring joint approval for everything can make daily operations difficult. A USA can distinguish between:

• Routine decisions delegated to a particular person.
• Major decisions requiring both shareholders’ approval, such as significant borrowing, issuing shares, or selling the business.

The objective is to balance efficient management with protection for both owners.

6. What if one shareholder works more than the other?

Equal ownership does not resolve how much each person must contribute to the business. A USA can address expected responsibilities, time commitments, extended absences, and what happens if someone stops participating.

It can also distinguish payment for work performed from returns on share ownership, with employment terms coordinated through separate agreements where appropriate.

7. How should we decide salaries, bonuses, and dividends?

Without agreed rules, one shareholder may expect profits to be distributed while the other wants to reinvest them. Different workloads may also create disagreement about compensation.

A USA can establish how compensation and distributions are approved, while preserving flexibility for the corporation’s financial position and applicable legal requirements. 

8. What if the business needs more money?

A USA can address whether shareholders are expected to provide additional funding, whether contributions will be loans or equity, and what happens if one shareholder cannot or will not contribute.

Agreeing on this in advance reduces the risk that a funding shortfall becomes an ownership dispute.

9. Can either shareholder sell their shares to someone else?

That depends on the applicable corporate documents and agreements. A USA can establish transfer restrictions, approval requirements, and rights allowing the remaining shareholder an opportunity to purchase first.

This helps reduce the risk of unexpectedly having to own the business with an unfamiliar or unsuitable person.

10. What happens if one of us wants to retire or leave?

A USA can establish an orderly exit process, including notice requirements, purchase rights or obligations, valuation, and payment terms.

It should also distinguish between leaving employment and ceasing to be a shareholder. Stopping work does not, by itself, settle what happens to someone’s shares.

11. How will we determine what the shares are worth?

A USA can specify a valuation process before a buyout becomes contentious—for example, an independent business valuation or another agreed method.

It can also address the valuation date, treatment of shareholder loans, and payment terms. A purchase price alone is not enough if the buyer cannot fund it or the seller faces unacceptable payment risk.

12. What happens if a shareholder dies or becomes unable to work?

A USA can establish whether death or defined disability triggers a purchase of shares, who may purchase them, and how the purchase will be funded.

This can help provide financial certainty for the affected shareholder or their estate while supporting continuity of the business. Any insurance arrangements should be coordinated with the agreement rather than assumed to solve the issue automatically.

13. What if one shareholder wants to sell the entire business and the other does not?

A USA can establish how sale proposals are considered and whether either shareholder can require or participate in a sale in defined circumstances.

14. Does a USA prevent disputes or eliminate risk?

No. It can reduce uncertainty and provide a process for resolving disputes, but it cannot guarantee cooperation or eliminate every risk.

There is also an important legal consequence: where a USA restricts directors’ management powers, Alberta legislation generally transfers corresponding director rights, duties, and liabilities to the shareholders to that extent. The agreement should therefore be reviewed for the responsibilities it creates, not just the protections it offers. 

15. When should we enter into the agreement?

Ideally, before a disagreement arises or a major change occurs. The agreement should then be reviewed when ownership, financing, personal circumstances, or business plans change.

The central benefit is straightforward: equal shareholders can agree now on how they will make decisions, deal with unexpected events, and separate fairly—rather than trying to negotiate those rules during a crisis.

How Getz Collins and Associates Can Help

Getz Collins and Associates has offices in Calgary and Strathmore and serves clients throughout Alberta. The firm’s business practice can help clients review documents, understand legal options, negotiate practical solutions and, where required, pursue or defend formal proceedings. For advice about a specific matter, contact us to arrange a consultation.

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