Shareholder Agreement with Certificate of Agreed Value | USA

Grant a right of first refusal to another shareholder with this Right of First Refusal Agreement to Acquire Shares template.

• The Agreement grants one shareholder a first right of refusal to acquire shares owned by another shareholder ('granting shareholder').
• The right is granted pursuant to the winding up of a third shareholder (a company solely owned by the granting shareholder) and the transfer of the third shareholder's share interest to the granting shareholder.
• This is a generic legal form which is not specific to any country or region.
• The Right of First Refusal Agreement to Acquire Shares is available in MS Word format and is fully editable to fit your needs.

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.

• Triggering events include:
  • right of first refusal;
  • default buy-sell;
  • shotgun or forced sale;
  • transfer on death.
• Available as a PDF download.

This Right of First Refusal clause can be inserted into a Shareholder Agreement to govern how a shareholder disposes of its shares.

• If a shareholder receives an arm's length offer from a third party to purchase its shares, the selling shareholder must give the other shareholders a right of first refusal to buy the shares before selling them to the third party.
• The clauses are downloadable and customizable.
• These generic clauses can be used in any common law country.
• Available in MS Word format.

Should your company shareholder agreement include a shotgun clause? This article discusses these types of provisions from an owner-manager's perspective.

What is a "shotgun clause"?

A 'shotgun clause' or 'buy-sell clause' is a clause in a shareholder agreement which provides that if a shareholder wants to pull their investment out of the company, they can force the other shareholders to buy their shares.

Benefits and risks of a shotgun provision

The selling shareholder sets the price and the terms of sale, and the remaining shareholder(s) decide whether to accept the sale on that basis. In theory, a shotgun clause provides a fair mechanism for shareholder departure, due to the fact that the seller does not know whether or not the price and terms will be accepted. Therefore they must be reasonable in setting the price and terms.

In practice, however, a selling shareholder often tries to use the shotgun clause to their advantage, which can result in the receiving shareholder(s) turning to arbitration or the courts to settle the matter.

Practical limitations of shotgun clauses

The article discusses the limitations on shotgun clauses, and how to use them properly in your shareholder agreement.

Alternative methods of shareholder breakups

The writer discusses other methods of no-fault corporate divorce that can be used instead of a shotgun provision, such as drag-along, tag-along clauses, right of first refusal options, and auction or bidding processes.

Author Credit

This article was written by Phil Thompson, business lawyer and corporate counsel in Ontario, Canada.

Prepare the minutes from an annual meeting of the shareholders of a USA business corporation with this downloadable template.

• The corporation's shareholders must meet each year to elect the directors for the coming year and conduct any other business that needs to be dealt with at the annual meeting.
• You can use this template to prepare the standard form of minutes, and re-use the form each year.

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