Shotgun Buy-Sell Provisions for Shareholder Agreement

Set out in writing how the shares of a departing (or deceased) shareholder in a BC company will be dealt with in this Shareholder Buy-Sell Agreement.

• This Buy-Sell Agreement is for a corporation with two equal shareholders.
• The template includes provision for a mandatory (shotgun) buy-sell notice from a departing shareholder to the remaining shareholder.
• If a shareholder dies, the surviving shareholder must purchase the interest of the deceased shareholder.
• Each shareholder holds life insurance policies on the other shareholder. The insurance proceeds may be applied to the purchase of the deceased's shares by the survivor.

Ensure the survival of your small business with the British Columbia Shareholder Buy-Sell Agreement.

Should your company shareholder agreement include a shotgun clause? Learn more about these provisions from an owner-manager's perspective, with this introductory article entitled "Shotgun Clauses & Owner Managers".

• A 'shotgun clause' or 'buy-sell clause' is a provision in the agreement that states if a shareholder wants out of the company, he/she can force the other shareholders to buy his/her shares.
• This article discusses the benefits and pitfalls of shotgun clauses, and the situations in which they work best.
• The author is an Ontario lawyer, with expertise in buy-sell agreements and other shareholder issues.

Learn about the types of events which trigger a sale of shares under a Unanimous Shareholder Agreement, and the methods used to implement the sale.

• right of first refusal;
• default buy-sell;
• shotgun or forced sale;
• transfer on death.