BUY AND SELL AGREEMENTS FOR CANADIAN CLOSE CORPORATIONS

Abstract

This article analyses the use of buy and sell agreements and their use by Canadian closely held corporations. The author exposes the problems that result from the death of a shareholder in the close corporation and in response, offers solutions to those problems in the form of careful planning through the use of binding stock purchase agreements. The author explores finance options for enacting these solutions as well as the tax implications of doing so. He follows with a discussion of some of the principle provisions that should form part of the buy and sell agreements, as well as methods for determining the appropriate valuation of such arrangements.