Document background
A Stock Transfer Restriction Agreement is a crucial document for private corporations in Canada seeking to maintain control over their ownership structure and protect their interests. This agreement is commonly implemented when a company is initially formed, during corporate restructuring, or when new shareholders are admitted. It outlines specific conditions under which shares can be transferred, including rights of first refusal, permitted transfers to family members or affiliated entities, and requirements for board approval. The agreement must comply with both federal legislation (such as the Canada Business Corporations Act) and provincial securities laws. It typically includes provisions for share valuation, transfer procedures, and mechanisms for ensuring new shareholders become bound by the agreement. This document is particularly important for closely-held companies, family businesses, and startups where maintaining control over share ownership is crucial for long-term stability and growth.
