What are the main reasons for signing a share purchase agreement among shareholders?

In both Canada and Quebec, the main reasons for entering into a share purchase agreement among shareholders are to ensure that the following situations—which may arise among shareholders—are properly governed:

• To prevent the transfer of shares to third parties who are not already shareholders of the company, during the lifetime of the shareholders (in the event of voluntary or forced withdrawal or incapacity) or upon death, and in the latter case, particularly to spouses not involved in the business;

• To establish the value of issued and outstanding shares or a mechanism for determining such value in the event of a transfer of shares, the method of payment for such shares, and the rules for the release of endorsements, if applicable;

• To identify situations in which a shareholder is required to sell their shares to the other shareholder(s), such as theft, fraud, incapacity, or breach of a , or death;

• To provide for rules applicable to situations requiring the transfer by shareholders of shares that have already been issued and are outstanding;

• To govern shareholders’ participation in the financing of the corporation and in its management.