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Shareholder Redemption Agreement Template for Canada

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Key Requirements PROMPT example:

Shareholder Redemption Agreement

"I need a Shareholder Redemption Agreement for our Ontario-based tech company to buy back shares from a retiring founder who holds 25% of common shares, with payment to be made in three installments over 2025."

Document background
The Shareholder Redemption Agreement is a crucial document in Canadian corporate law used when a corporation wishes to repurchase its shares from existing shareholders. This agreement is particularly relevant in situations such as shareholder exits, succession planning, or corporate restructuring. The document must comply with both federal and provincial corporate laws, including the Canada Business Corporations Act or provincial equivalents, and consider tax implications under the Income Tax Act. It typically includes detailed provisions on valuation, payment terms, representations and warranties, and closing conditions. The agreement serves to protect both the corporation and the selling shareholder(s) by clearly documenting the terms of the transaction and ensuring all legal requirements are met.
Suggested Sections

1. Parties: Identifies the corporation and the selling shareholder(s) as parties to the agreement

2. Background: Recitals explaining the context of the agreement, including current shareholdings and reason for redemption

3. Definitions: Defines key terms used throughout the agreement

4. Agreement to Redeem: Core provision detailing the shares to be redeemed and basic terms of the redemption

5. Purchase Price: Specifies the redemption price and how it was determined

6. Payment Terms: Details the timing and method of payment for the redeemed shares

7. Closing: Specifies the closing date and mechanics for completing the redemption

8. Representations and Warranties of Selling Shareholder: Seller's confirmations regarding share ownership, authority to sell, and other key matters

9. Representations and Warranties of Corporation: Corporation's confirmations regarding authority, financial capacity, and compliance

10. Conditions Precedent: Conditions that must be met before the redemption can proceed

11. Termination: Circumstances under which the agreement can be terminated

12. General Provisions: Standard legal provisions including notices, amendments, governing law, etc.

Optional Sections

1. Holdback Provisions: Used when part of the purchase price is held back to secure indemnification obligations

2. Tax Matters: Included when specific tax treatment or obligations need to be addressed

3. Non-Competition and Non-Solicitation: Added when the selling shareholder needs to be restricted from competing or soliciting

4. Interim Operating Covenants: Used when there's a significant gap between signing and closing

5. Shareholder Release: Including when the selling shareholder needs to release claims against the corporation

6. Continuing Shareholder Approval: Required when other shareholders' approval is needed for the redemption

7. Employment Matters: Included when the selling shareholder's employment status needs to be addressed

Suggested Schedules

1. Schedule A - Share Certificate Details: Lists the share certificates to be redeemed, including certificate numbers and share classes

2. Schedule B - Calculation of Purchase Price: Details the valuation method and calculations used to determine the redemption price

3. Schedule C - Required Corporate Approvals: Copies of board and shareholder resolutions approving the redemption

4. Schedule D - Payment Schedule: If payment is in installments, details the payment dates and amounts

5. Schedule E - Encumbrances: Lists any liens or encumbrances on the shares being redeemed

6. Appendix 1 - Closing Documents: List of all documents required to be delivered at closing

7. Appendix 2 - Third Party Consents: List of required third-party consents and their status

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈ˰æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions
Clauses






























Relevant Industries

Technology

Manufacturing

Professional Services

Retail

Healthcare

Real Estate

Financial Services

Construction

Energy

Agriculture

Mining

Transportation

Media and Entertainment

Relevant Teams

Legal

Finance

Corporate Governance

Treasury

Tax

Corporate Development

Board Secretariat

Shareholder Relations

Executive Leadership

Risk Management

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Corporate Secretary

General Counsel

Legal Counsel

Corporate Lawyer

Finance Director

Treasury Manager

Corporate Development Manager

Board Director

Company Secretary

Shareholder Relations Manager

Tax Director

Financial Controller

Business Development Director

Industries






Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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