What would happen to your business if one of the owners dies or can no longer continue? Ensure continuity of the business' ownership and management with this Canada Shareholder Buy-Sell Agreement (Promissory Note Method).
- Under this Agreement, the corporation holds life insurance policies on each of the shareholders and uses the proceeds to redeem and acquire its own shares from a deceased shareholder's estate.
- Upon the death of a shareholder, the surviving shareholders can purchase the deceased's shares on a pro rata basis (proportionate to their current shareholdings) by issuing the corporation a promissory note for the purchase price.
- The corporation will loan the purchaser the amount of the purchase price from the insurance proceeds, and then makes an election for a deemed dividend to be paid from the capital dividend account if possible.
- This Agreement is governed by Canadian income tax laws.
This Canada Shareholder Buy-Sell Agreement (Promissory Note Method)
is available as a fully editable MS Word template.