Unanimous Shareholder Agreements

The unanimous shareholder agreement is a feature of most Canadian corporate statutes that allows the shareholders to, by creating an agreement meeting the necessary criteria, restrict the powers of the directors to manage the business and affairs of the corporation. One possible justification for this is the "nexus of contracts" theory that all corporations are notionally reducible to voluntary agreements. Three key areas of ambiguity surrounding unanimous shareholder agreements are examined in this dissertation, with specific reference to existing judgments. The requirements for their formation are reviewed, including the exact meaning and strictness of the unanimity criterion and the necessity and validity of possible restrictions upon the directors. Four competing approaches to their enforcement are identified and contrasted: the corporate constitutional approach that truly removes the board's powers, the contractual approach that treats unanimous shareholder agreements as contracts existing alongside the corporate power structure, and the directors' duties and oppression approaches that apply existing corporate law remedies to deal with violations. The transfer of duties and liabilities that accompanies unanimous shareholder agreements is considered in the context of unusual power structures and stakeholder theory, revealing unaddressed and possibly unsolvable problems in the legislation. It is concluded that, although the unanimous shareholder agreement may suggest a move toward a more contractual view of the corporation, it can also be understood as a specific tool within the statutory framework.