Shareholder Agreement Lawyers in Toronto | Drafting, Review & Negotiation

A shareholder agreement is the document you want in place before circumstances change. While everyone is aligned, the terms read as reasonable. Once someone wants to exit, to sell, or to bring in a new investor, those same terms decide what happens — and by then they’re settled, not open. We draft them carefully up front, while they’re still easy to agree — with the depth of a large corporate firm and the directness of a boutique.

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Why timing is everything here

The value of a shareholder agreement is almost entirely in when it’s written. Drafted while the owners are aligned, every term reads as fair and gets agreed in an afternoon. Left until an owner wants out, a buyer appears, or a new investor wants in, the very same terms are suddenly worth real money to someone — and far harder to settle. The agreement does its best work quietly, years before anyone reaches for it.

What we do

We draft, negotiate, and review the agreement that governs how owners deal with each other and their shares:

Transfer restrictions — who can sell shares, to whom, and when.
Rights of first refusal and pre-emptive rights — so existing holders aren’t diluted or surprised by who buys in.
Tag-along and drag-along — how a sale works when some owners want to sell and others don’t.
Minority protections and reserved-matter consents — keeping certain decisions from being made without the right approvals.
Exit and valuation mechanics — buy-sell, put and call, and how shares are valued when an owner leaves or the owners decide to go separate ways.
Review of investor- or shareholder-drafted agreements before you sign, so you understand exactly what you’re agreeing to and where it should change.

Where the judgment comes in

These provisions interact, and that’s where the care is needed. A drag-along is only as protective as the valuation mechanism behind it; a reserved-matters list is only useful if it covers the decisions that actually matter to you. We work through how the terms behave in the moments that bring them to life — a departure, an incoming investor, an offer for the company — and draft for those, not just the clean case. A standard agreement among an aligned founding team is straightforward; a negotiated or investor-facing one is advisory work, and we handle it that way, directly.

Who we work with

We act for founders formalizing how they’ll hold shares together, companies adding investors or new shareholders who need a full agreement, and owners reviewing an agreement that someone else has drafted before they sign it. We also act for the investors taking a stake who need their rights properly recorded. Whichever seat you’re in, you work with the lawyer handling your matter — from the first conversation through to a signed agreement that holds.

How we work

Large-firm experience, boutique focus. The depth of drafting and negotiation clients would expect from a much larger firm, delivered at a scale where they’re known rather than numbered.
Senior attention, directly. You deal with the lawyer responsible for your matter, not a rotating team.
Scoped, and clear on cost. We tell you what the work involves and what it will cost before it starts; where the agreement is standard, we can handle it at a fixed fee.
Built for the long term. A shareholder agreement is revisited as owners and investors change. We’d rather be the counsel who knows why each term is there than redraft it blind later.

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A defined version for founders

For a straightforward founding team, the work is well-defined: the Startup Kit includes one standard founders’ shareholders agreement at a defined fee. Complex, negotiated, or investor-facing agreements are advisory work, handled directly — so a routine agreement is done efficiently and a negotiated one gets the attention it needs.

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Common questions

We already have a founders’ agreement — do we need this too? The founders’ agreement is the early-stage version of the same deal. Once you add investors or other shareholders, you move to a full shareholders’ agreement. We draft so that move is a step forward, not a redo.
What are tag-along and drag-along rights? Tag-along lets a minority owner join a sale on the same terms as a majority seller; drag-along lets a majority require the others to sell so a clean sale of the whole company can close. Both are about making a future sale work.
An investor sent us their shareholders’ agreement — should we just sign? Have it reviewed first. These agreements are written from the drafter’s point of view; we tell you what you’re agreeing to and where it should change before you commit.
How are shares valued when an owner leaves? The agreement sets the method up front — a formula, an appraisal, or an agreed value — so the number is settled in advance rather than negotiated at the worst moment.
When should we put one in place? Before you need it. While everyone is aligned, the terms are easy to agree; that window is the whole point.

What comes next

A shareholder agreement records decisions that also live in your governance and rest on your ownership and equity structure. It’s tested at a financing and again at a sale, and it grows out of the founders’ agreement you start with. We can take each as it comes, or act as your ongoing corporate counsel across all of it.

Sign the agreement before you need it, and it does its job quietly.

Tell us who owns the company and where it’s heading, and you’ll hear back from the lawyer who would handle it.

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Representative Experience

Our recent experience includes complex corporate and transactional mandates involving multi-party negotiations, layered capital structures, and cross-border execution. Representative matters include:

advising on a CAD $2M equity financing for a Toronto-based cybersecurity company.
structuring a CAD $4.5M convertible note financing for a Canadian technology startup.
advising on a USD $5M cross-border equity financing involving international venture structuring.
managing a USD $100M+ ownership restructuring of a venture-led, government-backed aerospace project

Across these engagements, our focus is durability — ensuring that each transaction remains structurally coherent through future financings, governance evolution, and exit scenarios.

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).

Shareholder Agreements