This section reiterates and defines the standard provisions of the Shareholder AgreementShareholder Agreement: a legally-binding document which describes the mutual obligations of the parties to a Joint VentureJoint Venture: commonly, a business to which two or more parties contribute the essential land, capitalCapital: cash, property, equipment, services, and contracts or leases., and services, in return for a share in its ownership and control. (Note: the Joint Venture is very strictly defined under Canadian law.).. It also highlights other matters of importance which the parties have not covered elsewhere (see for example, “Protective Covenants” below, p. 6-37).
The shareholder agreement puts into formal legal language all the important benefits and protections that you expect to get from the JV. It is far more significant than any number of decisions that you may later get from the board of directors. Having a seat or several seats on the board has its value, but the Shareholder Agreement takes pre eminence in the end. Skillfully assembled, it should protect against even the most malicious partners. (See Appendix 6 for a checklist of headings in a Shareholder Agreement.)
