by Garnet Brooks Business Lawyer, Wickwire Holm - Dec. 2012

Aboriginal entrepreneurship is on the rise in Canada. The Aboriginal Entrepreneur Law series of articles is written by business lawyer, and aboriginal entrepreneur Garnet Brooks, of the firm Wickwire Holm. The articles are designed with the goal of discussing some of the basic legal concepts that entrepreneurs and business will likely have to deal with, as well as identifying some of the unique business legal issues associated with being a status Indian entrepreneur in Canada.

What is a Shareholders’ Agreement?

It’s quite common, unfortunately, for new small business entrepreneurs to make the decision not to get a shareholders agreement when starting out. Common reasons given include that they want to make sure things go well, and make some money before investing in a shareholders’ agreement, they are in business with friends or family that they trust, it can be done later, etc… These are poor reasons that could lead to a very big mistake!

This is dangerous because many, if not most, entrepreneurs will start out by investing their time and money. Some may quit their job, take loans from banks, borrow from friends and family and do whatever they need to raise the funds to get the venture started. In other words they take on massive amounts of RISK.

One of the key components to managing risk at the outset (when more than one shareholder is involved in the incorporated business) is a shareholders’ agreement. Of course not every start-up ...

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