A corporation without one runs on the statute’s defaults: the Ontario or federal Act, the articles and the by-laws. Those defaults say a majority of the board decides, a majority of the votes elects the board, and shares move to whoever the directors approve. They say nothing about what happens when a founder leaves, when two founders at 50/50 disagree, or when a buyer wants the whole company and one holder refuses.
A shareholders’ agreement fills each of those gaps: the reserved matters that need every founder, a deadlock mechanism, a right of first refusal, tag-along and drag-along rights, and a buy-out when someone leaves. Under both Acts a unanimous shareholders’ agreement can also take powers from the directors and give them to the shareholders, which is how founders keep the decisions that matter in their own hands.
Signed while the founders agree, every term reads as fair; signed after a disagreement, the same terms cost money. Launch issues the shares and the Startup Kit adds the agreement, the two together at CAD $5,950. Where the terms have to be negotiated rather than agreed, the firm’s shareholder agreements practice handles it.