Equity Agreement Template for Canada

An Equity Agreement sets out the terms and rights when someone receives ownership shares in a Canadian company. It covers how much equity (ownership) they get, when they receive it, and what happens to those shares under different circumstances like leaving the company or if the business is sold.

These agreements are crucial for startups and growing businesses, especially when bringing on new partners or setting up employee stock options. They protect both the company and shareholders by clearly defining vesting schedules, voting rights, and transfer restrictions. In most provinces, they work alongside corporate bylaws and must comply with provincial securities regulations.

Use an Equity Agreement when bringing new shareholders into your Canadian company, especially during funding rounds, partnership formations, or employee stock option programs. This agreement becomes essential the moment you plan to distribute company ownership beyond the initial founders.

The timing is critical - put the Equity Agreement in place before transferring any shares or stock options. This protects everyone by clearly documenting ownership rights, vesting schedules, and transfer restrictions upfront. It's particularly important for startups seeking investment, companies offering equity compensation, or businesses bringing on key personnel as equity partners.

• Simple Agreement For Equity: Basic startup funding tool that converts investment to shares at a future date, popular with early-stage companies
• Private Equity Subscription Agreement: Detailed agreement for direct purchase of company shares, typically used in larger private investments
• Equity Compensation Agreement: Structures share-based employee compensation, including vesting schedules and performance conditions
• Sweat Equity Agreement: Grants shares in exchange for work or services instead of cash investment
• Phantom Equity Agreement: Provides financial benefits of ownership without actual shares, useful for bonus structures

• Company Founders: Create and use Equity Agreements when distributing ownership shares, especially during early stages and expansion
• Corporate Lawyers: Draft and review agreements to ensure compliance with provincial securities laws and protect client interests
• Investors: Receive equity rights and protections when funding companies through share purchases or convertible instruments
• Employees: Become bound by these agreements when receiving stock options or share-based compensation
• Board Members: Approve and oversee equity distributions, ensuring alignment with corporate governance requirements
• Securities Regulators: Monitor compliance with Canadian securities laws and disclosure requirements

• Company Details: Gather current capitalization table, corporate bylaws, and shareholder information
• Equity Terms: Define number of shares, class of shares, price per share, and any special rights or restrictions
• Vesting Schedule: Outline timing and conditions for share distribution, including cliff periods and milestones
• Transfer Restrictions: Specify rules for selling or transferring shares, including right of first refusal
• Securities Compliance: Check provincial securities regulations for required disclosures and exemptions
• Approval Process: Obtain board authorization and existing shareholder consent if required
• Documentation: Our platform generates precise, compliant agreements tailored to your specific equity structure

• Party Details: Full legal names, addresses, and corporate information of all shareholders and the company
• Share Specifics: Number, class, and value of shares being issued or transferred
• Consideration: Clear description of payment or value exchange for the equity
• Vesting Terms: Detailed schedule and conditions for share distribution over time
• Transfer Rights: Rules for selling shares, including right of first refusal and tag-along provisions
• Shareholder Rights: Voting powers, dividend rights, and participation in future rounds
• Dispute Resolution: Process for handling disagreements under provincial law
• Termination Provisions: Circumstances and procedures for ending the agreement

While both documents deal with company ownership, an Equity Agreement differs significantly from a Simple Agreement for Future Equity (SAFE) in several key ways. An Equity Agreement establishes immediate share ownership, while a SAFE promises future equity under specific conditions.

• Timing of Ownership: Equity Agreements transfer shares immediately upon execution; SAFEs only convert to equity during triggering events like funding rounds
• Valuation Requirements: Equity Agreements need a current company valuation; SAFEs defer valuation until conversion
• Legal Rights: Equity Agreement holders gain immediate shareholder rights; SAFE holders must wait until conversion for voting or dividend rights
• Documentation Complexity: Equity Agreements typically require more detailed terms and conditions around immediate ownership; SAFEs are intentionally simpler
• Regulatory Compliance: Equity Agreements face stricter securities regulations as they involve immediate share issuance; SAFEs often qualify for lighter regulatory treatment