Unanimous Shareholder Agreement (USA) in Canada: What It Is and When You Need One
A unanimous shareholder agreement (USA) is a written agreement among all shareholders of a corporation that restricts the directors' power to manage the business. It is recognized by statute: section 108 of Ontario's Business Corporations Act and section 146 of the CBCA. Shareholders who take over those powers also take on directors' duties and liabilities.
That last point is what sets a USA apart from an ordinary shareholder agreement, and it is why the choice matters. This guide explains what the law says, how a USA differs from other agreements, what it usually contains and when you need one.
What is a unanimous shareholder agreement?
Under the Ontario Business Corporations Act (OBCA), a unanimous shareholder agreement is a written agreement among all the shareholders, or all the shareholders and others who aren't shareholders, that restricts in whole or in part the directors' powers to manage or supervise the management of the corporation's business and affairs. The Canada Business Corporations Act (CBCA) uses almost the same definition.
Two conditions must both be met:
- Every shareholder signs. If even one shareholder is not a party, it is not a USA.
- It restricts the directors' powers. An agreement that only deals with share transfers or voting, without limiting the board, is an ordinary shareholder agreement.
What does a unanimous shareholder agreement do under the OBCA and CBCA?
A USA changes who is legally responsible for decisions. To the extent it restricts the directors' powers, the shareholders who hold those powers get all the rights, powers, duties and liabilities of a director, including the directors' defences. The directors are relieved of their duties and liabilities to the same extent.
Effect | Ontario (OBCA) | Federal (CBCA) |
|---|---|---|
Definition and validity | s. 1(1), s. 108(2) | s. 2(1), s. 146(1) |
Single-shareholder declaration | s. 108(3): registered holder of all issued shares | s. 146(2): beneficial owner of all issued shares |
Shareholders take on directors' duties and liabilities | s. 108(5), including wage liability under s. 131 | s. 146(5), including liability under s. 119 |
New shareholders bound automatically | s. 108(4), (7), (8) | s. 146(3) |
Buyer without notice can undo the purchase | Within 60 days of receiving a complete copy | Within 30 days of becoming aware of it |
Copy kept in corporate records | s. 140(1)(a) | s. 20(1)(a) |
The transfer of liability is real. In Ontario, for example, directors are jointly liable to employees for up to six months' unpaid wages. If a USA moves management to the shareholders, that exposure moves with it. Shareholders signing a USA should understand what they are taking on, and a lawyer should explain it before anyone signs.
Shareholder agreement vs unanimous shareholder agreement: what's the difference?
Ordinary shareholder agreement | Unanimous shareholder agreement | |
|---|---|---|
Who signs | Two or more shareholders | All shareholders |
Legal basis | Contract; voting agreements allowed by OBCA s. 108(1) and CBCA s. 145.1 | Statute: OBCA s. 108(2), CBCA s. 146 |
Limits the board | No | Yes, in whole or in part |
Shifts directors' liabilities | No | Yes, to the extent of the restriction |
Binds future shareholders | Only if they sign or agree | Automatically, by statute |
Kept in the minute book | Good practice | Required |
A common example of an ordinary agreement is a "pooling" or voting agreement, where two shareholders agree how to vote their shares. It binds them to each other, but the board still runs the corporation.
What clauses does a shareholder agreement usually include?
Most shareholder agreements in Canada, whether unanimous or not, cover the same core terms. The exact mix depends on the business and the relationship between the owners.
Clause | What it does |
|---|---|
Board composition | Who can nominate directors, and how many |
Reserved matters | Decisions that need shareholder approval, such as borrowing, selling assets or issuing shares |
Share transfer restrictions | No sale or pledge of shares without consent |
Right of first refusal (ROFR) | Other shareholders can match an outside offer before shares are sold |
Shotgun (buy-sell) | One shareholder names a price; the other must either buy or sell at that price |
Drag-along | A majority selling to a buyer can require the minority to sell on the same terms |
Tag-along | The minority can join a majority sale on the same terms |
Deadlock | Mediation, arbitration or a buy-sell process when owners can't agree |
Death, disability, departure | Mandatory buyouts, often funded by insurance, and how shares are valued |
Non-compete and non-solicit | Limits on competing with the business or poaching clients and staff |
Funding | Whether shareholders must lend or invest more, and what happens if they don't |
Dispute resolution | Arbitration rules; the OBCA expressly allows a USA to refer disputes to arbitration |
The OBCA also lets a USA set its own amendment procedure, so the parties can decide in advance how the agreement itself can be changed.
When do you need a unanimous shareholder agreement?
A USA is worth considering whenever control and responsibility don't match the default rules, where directors manage and shareholders vote.
- Founders who are also the directors. Many small corporations with two to four owners use a USA so key decisions need everyone's agreement.
- Minority investors. A minority shareholder can secure vetoes over major decisions that the articles alone wouldn't give.
- Passive shareholders. If some owners don't want any management role, an ordinary agreement may suit them better than a USA that shifts liabilities onto the shareholders.
- Family corporations. Succession, buyouts on death and limits on transfers to outsiders are common reasons.
- Non-resident owners. Who controls the board can affect tax status, which is a question for a tax advisor. See our guide for non-residents.
Sign it early. Negotiating exit terms while everyone gets along is far easier than during a dispute.
Can a single shareholder have a unanimous shareholder agreement?
Yes. In Ontario, if the registered holder of all the issued shares signs a written declaration restricting the directors' powers, the declaration is deemed to be a unanimous shareholder agreement under section 108(3). The CBCA has the same rule for the beneficial owner of all the shares under section 146(2).
A single-shareholder declaration is typically used when the owner wants someone else to sit as director but keep real control, or when a parent company holds all the shares of a subsidiary. Because liabilities shift to the shareholder, get advice before using one.
Is a shareholder agreement template enough?
Searches for a "shareholder agreement template Ontario" are common, and a template can show you which topics to think about. It is rarely enough on its own, for three reasons:
- It may become a USA by accident. If all shareholders sign a template that limits the board, the statutory liability shift applies whether or not anyone intended it.
- It must match your articles. Share classes, transfer restrictions and director numbers in the agreement have to fit what your articles actually say.
- Valuation and exit clauses are hard. Shotgun, buyout and non-compete terms that don't fit your facts can be unworkable or unenforceable when you rely on them.
A lawyer should review or draft any shareholder agreement, and especially a USA. Our service is lawyer-supervised.
How do you put a unanimous shareholder agreement in place?
- Set up the share structure in your articles, including classes and transfer restrictions.
- Agree the business terms: control, reserved matters, exits and funding.
- Have a lawyer draft or review the agreement, and get tax advice on control and buyouts.
- Have every shareholder sign. Add any non-shareholder parties, such as the corporation itself.
- File a copy in the minute book, as the OBCA and CBCA require, and note it on share certificates.
- Bind new shareholders by having them sign a joinder when they acquire shares.
When you incorporate with us, we can set up a share structure that suits several owners and prepare your minute book and by-laws. Federal corporations follow the CBCA rules described here; see federal incorporation and our pricing. Our guide to Ontario articles of incorporation explains share classes and transfer restrictions.
Frequently asked questions
What is a unanimous shareholder agreement?
It is a written agreement among all shareholders that restricts the directors' powers to manage the corporation. It is recognized by OBCA section 108 and CBCA section 146, and binds future shareholders automatically.
Is a unanimous shareholder agreement mandatory?
No. Neither the OBCA nor the CBCA requires one. But if a corporation has one, it must keep a copy with its corporate records.
Do shareholders become liable like directors under a USA?
Yes, to the extent the agreement restricts the directors' powers. Those shareholders take on directors' rights, duties and liabilities, and the directors are relieved to the same extent.
Can a single shareholder sign a unanimous shareholder agreement?
Yes. A written declaration by the holder of all issued shares that restricts the directors' powers is deemed to be a USA, under OBCA s. 108(3) and CBCA s. 146(2).
Are new shareholders bound by an existing USA?
Yes. A person who acquires shares is deemed a party. If they bought for value without notice, they can rescind the purchase within 60 days of getting a copy in Ontario, or 30 days of learning of it federally.
What is a shotgun clause?
A buy-sell clause: one shareholder offers to buy the other's shares at a stated price, and the other must either sell at that price or buy the offeror's shares at the same price.
Can I use a free shareholder agreement template?
As a checklist, yes. As your final agreement, it's risky: it may turn into a USA without your intending it, conflict with your articles, or fail when you need it. Have a lawyer review it.
Sources: Business Corporations Act, R.S.O. 1990, c. B.16 (ss. 1(1), 108, 131, 140, 145); Canada Business Corporations Act (ss. 2(1), 20, 21, 145.1, 146). Checked October 2026. General information, not legal or tax advice.
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