An agreement between the owners of a business as to what
triggers a requirement to buy or sell their ownership interest can
stand alone or be part of an agreement that sets out how the
co-owners intend to manage and finance the business and their
If there is more than one owner in your business, having a buy
sell agreement is a good idea. Regardless of the type of business,
it's wise to consider the various 'what ifs' that come
with having co-owners, and decide in advance how to handle
What do you typically see addressed in buy sell agreements? That
depends on the circumstances, but will often cover the following
types of issues, among others:
What happens to a co-owner's interest in the business if he
or she dies? Will the other co-owners buy out the deceased
owner's interest or allow it to be transferred to any
If the co-owners work for the business, what happens if they
leave or retire?
What happens if one wants to sell? Do the other co-owners have
the first right to purchase that interest before it is offered to
outsiders? Can a co-owner sell to a competitor?
How will the buy-out price be determined and when will it be
Will the business take out life insurance on the co-owners to
fund a buy-out?
Do the co-owners want a way to trigger a sale by one to the
other(s) if they no longer get along?
If a majority want to sell, can they force all co-owners to
Because they are meant to plan for the unpredictable, as well as
the potential for a breakdown in relations between co-owners, it is
always better to consider and prepare a buy sell agreement at the
outset of a business or co-ownership relationship.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).