Unanimous shareholder agreement (USA)
A unanimous shareholder agreement (USA) is signed by every shareholder of a company and can restrict or remove the powers directors would otherwise have, transferring those powers and responsibilities to the shareholders instead. It is a more formal tool than a regular shareholder agreement, with effects set out in corporate statutes.
Most shareholder agreements are private contracts that bind only the people who sign them. A unanimous shareholder agreement is different: because every shareholder signs it, corporate statutes let it actually strip powers away from the board of directors and hand them to shareholders directly.
What makes a USA different
- It must be signed by all shareholders, not just some of them
- It can remove directors’ power over specific decisions entirely
- Shareholders who take on that power also take on the legal duties and potential liability that go with it
- New shareholders are usually bound by it automatically when they acquire shares
Why this matters in a sale
A buyer acquiring shares in a company governed by a USA is stepping into whatever restrictions and obligations it created, sometimes without realizing it. Reviewing the USA closely during due diligence matters just as much as reviewing a regular shareholder agreement, and arguably more, because it can change who actually has authority to run the company.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Treadstone LawLegal commentaryCorporate Law
- 02Treadstone LawLegal commentaryChecking Corporate Status and Good Standing Before Buying an Ontario Business
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