Canada Shareholder Buy-Sell Agreement (Promissory Note Method)

What would happen to your business if one of the owners dies or can no longer continue? Ensure continuity of the business' ownership and management with this Canada Shareholder Buy-Sell Agreement (Promissory Note Method).

• Under this Agreement, the corporation holds life insurance policies on each of the shareholders and uses the proceeds to redeem and acquire its own shares from a deceased shareholder's estate.
• Upon the death of a shareholder, the surviving shareholders can purchase the deceased's shares on a pro rata basis (proportionate to their current shareholdings) by issuing the corporation a promissory note for the purchase price.
• The corporation will loan the purchaser the amount of the purchase price from the insurance proceeds, and then makes an election for a deemed dividend to be paid from the capital dividend account if possible.
• This Agreement is governed by Canadian income tax laws.

This Canada Shareholder Buy-Sell Agreement (Promissory Note Method) is available as a fully editable MS Word template.