Document background
The Stock Repurchase Agreement is a crucial document used when a Canadian corporation intends to buy back its own shares from existing shareholders. This type of transaction is commonly implemented for various strategic purposes, including capital structure optimization, excess cash utilization, or facilitating shareholder exits. The agreement must comply with the Canada Business Corporations Act, provincial securities laws, and relevant tax legislation. It typically includes detailed provisions regarding purchase price determination, closing mechanics, representations and warranties, and conditions precedent to closing. The document is particularly important as it helps ensure the transaction meets legal requirements for corporate solvency, shareholder approval (if required), and regulatory compliance, while also addressing tax implications for both the corporation and selling shareholders.
