If two or more people own a company – what happens if one of the people….

  1. Retires from the business
  2. Becomes disabled 
  3. Dies
  4. Files for bankruptcy 
  5. Goes through a matrimonial breakdown


Every corporation with more than one owner should have a shareholder’s agreement. A shareholder’s agreement sets out the rights and obligations of both the shareholder(s) and the corporation. It’s important that the shareholders complete, understand & periodically review this contract.   

The buy/sell provisions in the shareholders agreement should detail the mechanics for the transfer of shares in the following situations (1-5) outlined above.

Life insurance is an important part of #3. If one shareholder dies, the proceeds from a life insurance policy provides liquidity to purchase the shares from the deceased shareholders estate.