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Being good friends doesn’t mean you are going to be good business partners. You need to plan for what’s going to happen if your co-founder wants to leave or sell. A shareholders’ agreement will set everything in stone and define how your corporation handles raising capital, distributing dividends, shareholders’ exits and management controls.How

We Can Help Shareholders 

Our law firm, with a wealth of experience, specializes in offering personalized legal counsel for startups and entrepreneurs, particularly in the realm of shareholders agreements. We recognize the crucial importance of such agreements in establishing clear rights and obligations among shareholders. With our expertise, we have drafted numerous tailored shareholders agreements, addressing key elements like share ownership, voting rights, dividend distribution, and dispute resolution mechanisms

For more information about shareholders agreement, read our article: Your Guide to A Shareholders Agreement.

Strategic Exit 

The importance of the shareholders agreement goes beyond corporate organizational matters, and can determine the future success of your business and any potential exit.

The point here is that most exits are mergers and acquisitions (M&A), and most of them happen earlier than you would probably expect from a strategic buyer. Therefore, from day one you need to be ready in case an exit opportunity arises. For more information read our article: Your Guide to A Shareholders Agreement.


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Let’s build your Letter of Intent share acquisition or commercial, promissory note, consulting, employment or stock option agreement, software license agreement, SAFE document and more so that you can get organized, raise money and gain credibility to expand your business.

Visit our FL Dr@ft™ Automated Documents section of the FLConnect membership to get started today. 

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  • Infrastructure Ontario‘s Request for Proposal Documents (RFPs) of the Go-Rail Expansion Project.
  • Infrastructure Ontario‘s Go-Rail Expansion project agreement, a single fully integrated contract using the Design-Build-Finance-Operate-Maintain (DBFOM) model.
  • Infrastructure Ontario’s Transit Oriented Communities (TOC) project agreements including term sheets, joint ventures, construction lease and option agreements with developers to jointly build mixed-use developments as part of Ontario Line subway project.
  • Infrastructure Ontario‘s Real estate matters such as expropriations/ collect and compete, land acquisition and disposition.
  • Meridian Credit Union, a leading financial institution in Toronto, in a share subscription transaction in FinTech Startup that includes legal due diligence, software licensing, drafting of transactional documents and securities law compliance on matters such as private issuer and exemptions from prospectus.
  • Motusbank, a federally chartered online bank in Toronto, in standardizing the terms and conditions of the bank’s cloud-based services, including Saas agreements, software licensing agreements, click-wrap agreements, and other technology-related agreements for the use of the bank’s online users. 
  • Fincantieri, the largest naval shipbuilding group in the world, in naval ship IP design agreements, transfer of technology and licensing agreements negotiated and signed with several armed forces in the Middle East region to protect Fincantiari’s intellectual property rights.
  • Jordan Aviation‘s major shareholder in an airline company, to conclude a US$26 million share acquisition transaction from a large international private equity firm and related escrow agreements with Citi Bank London.
  • Jordan Aviation’s major shareholder in an airline company, to conclude a US$10 million share acquisition transaction.
  • Jordan Aviation, in its set-up of an aviation fund of US$30 million. Established fund company, management and sponsor companies. Prepared investment management agreement and subscription agreement. Moreover, drafted dry lease contracts for aircrafts as part of the fund transaction.
  • Fincantieri, in the negotiation of a joint venture transaction with Al Zamil Shipyard in KSA for the design and construction of several offshore vessels and building of facilities for military and offshore vessels in the new King Abdul Aziz Port in KSA.
  • National Holding, in the acquisition by a German firm (Knauf) to 51% stake in National Holding’s subsidiary.
  • National Holding, in a joint venture transaction with Vivartia, a Greek holding group based in Athens.
  • National Holding, in a US$36 million acquisition by Qatari sovereign wealth fund to National Holding’s shares in a Steel Factory in Egypt.
  • National Holding, in a US$40 million capitalization in a home appliances factory in Jordan, with ownership restructuring.
  • Dubai Bank and Dubai Holding, a global conglomerate and sovereign wealth fund of the government of Dubai and its ruling family, in producing a due diligence report and structuring advise in respect of a US$300 million cross-border acquisition/ privatization in a state-owned Jordanian Bank.
  • Dubai Holding in producing four separate legal due diligence reports with respect to acquisition transactions totaling close to US$200 million in Eastern investment group holding UK, International Energy Management Company, Jordan Airline Training and Simulation (JATS) and Jordanian Flight and Catering Services Company (Subsidiary of Alpha Co. -UK);
  • Kuwait National Bank in producing a due diligence report with respect to acquisition transaction in Bank Al Etihad in Jordan.
  • National Holding, in several international procurement and sale of goods contracts and trade between countries that involved contract drafting and other banking documentations such as letter of credits, bank guarantees and other documents for shipping and handling of goods based on Incoterms Rules.
  • Fincantieri as part of the in-house legal team, in closing a US$5.6 billion naval shipbuilding contract signed with the Qatari Navy in 2016.
  • Fincantieri as part of the in-house legal team, in the negotiation of US$ multi-billion procurement contracts, to equip and arm newly ordered warships, with suppliers such as Airbus, Raytheon, MBDA, Rolls-Royce, Thales and Leonardo.
  • Eagle Hills, a leading real estate developer, in several hotels operation agreements with Marriott Inc to license the operation of several (5) stars hotels and resorts in the Middle East region including St. Regis Hotel and residences, W Hotel & Residences and Westin Hotel.
  • Engie, a French multinational power company, to structure the set- up and finance of a 150 MW solar power project in Jordan.
  • Fincantieri, in closing a complex “Engineering, Procurement and Construction” contract for a military shipyard in the UAE and related joint venture contract for the management and operation.
  • Fincantieri in a US$250 million refitting contracts of naval units (ISS, FOS, ILS) with several naval forces in the Middle East.
  • National Holding, in several international procurement and sale of goods contracts and trade between countries that involved banking arrangements such as letter of credits, bank guarantees and other documents for shipping and handling goods.
  • National Holding in the setup, design and construction of Greenfield cable factory in Algeria.
  • Damac Properties in providing contract drafting to construction, consultancy, plot and unit SPA related to US$ multi-billion real estate projects in Dubai, Abu Dhabi, Jordan, Egypt, Lebanon, KSA and the UK based on FIDIC, NEC and bespoke forms of contract.
  • Damac Properties as part of the inhouse legal team, in the negotiation of a US$ 250 million construction contract with Arabtec Holding to construct Damac’s 90 floors tower (Ocean Heights in Dubai Marina) in Dubai, UAE.

Why Do Shareholders Need Contractual Protections?

Shareholders in private corporations typically seek additional rights and protections because these shareholders:

  • Have no liquidity. The shares of these corporations have not been qualified by prospectus and as such these shareholders often do not have a market into which they can sell their equity.
  • Are subject to transfer restrictions. Under National Instrument 45-106 Prospectus Exemptions (NI 45-106) and the similar prospectus exemption in Ontario under section 73.4(2) of the Ontario Securities Act, R.S.O. 1990, c. s. 5 (OSA), a private issuer is required to restrict the transfer of its shares either in its constating documents or in one or more agreements with its security holders (section 2.4(1), NI 45-106). Most shareholder agreements include provisions preventing the shareholders from transferring or disposing of their equity interests other than in accordance with the agreement (see Transfer Restrictions below).
  • Expect to be involved in the corporation’s management. Shareholders in a private corporation often expect to have a greater involvement in the corporation’s management. This is especially true in shareholder agreements governing joint ventures (JVs)

What is the Right of First Offer?

The right of first offer (ROFO) requires a shareholder to offer its shares to the other shareholders before offering to sell to third parties. If the other shareholders do not buy the shares, the shareholder usually has a limited window of time to sell to a third party, but that sale must be on terms no more favorable than those offered to the other shareholders.

Also, shareholders are often given a ROFO (or pre-emptive right) in connection with new share issuances by the corporation itself (see Pre-Emptive Rights below).

What is the Right of First Refusal?

The right of first refusal (ROFR) is similar to the ROFO, except that the selling shareholder offers to sell the shares to the other shareholders after receiving a bona fide third-party offer. The offer to the shareholders must typically be made on terms no less favorable to the remaining shareholders than those offered by the third party. The selling shareholder describes the terms of the third-party offer to the other shareholders, including the identity of the proposed purchaser. This distinguishes the ROFR from the ROFO, where the shareholders do not know the identity of the third-party purchaser when deciding whether or not to buy the offered shares.

What is the Tag-Along Right?

Tag-along rights protect minority shareholders. These rights typically provide that if the controlling shareholders sell all or some portion of their shares, they must allow the other shareholders to participate in the sale on a pro rata basis on the same terms.

What is the Pre-Emptive Right?

Pre-emptive rights allow shareholders to purchase their pro rata share of future share issuances by the corporation. These rights are designed to protect shareholders against dilution of their holdings. For example, a corporation may offer pre-emptive rights to its shareholders that entitle a 10% shareholder to purchase 10% of the corporation’s future share issuances. This provision entitles a 10% shareholder to maintain its ownership percentage at 10% after the new issuance.

What is the Drag-Along Right?

Drag-along rights are the counterpart to tag-along rights and protect the majority interest. These rights typically allow a controlling shareholder selling all of its shares to a third party to also force the minority shareholders (whether or not they agree to sell all of their shares through the exercise of the tag-along rights) to sell all of their shares in the sale. Buyers often want to purchase 100% control, and the drag along rights allow majority shareholders to sell 100% of the shares while owning a lower percentage.

Tag-along rights and drag-along rights typically require that the minority shareholders sell their shares on the same terms and conditions (including purchase price) as the controlling shareholder (though minority shareholders are not usually required to make the same representations, warranties and indemnities as the controlling shareholder).