Share Cancellation Agreement for Canada

Share Cancellation Agreement Template for Canada

A comprehensive legal document governed by Canadian federal and provincial corporate law that formalizes the process of cancelling issued shares of a corporation. The agreement details the terms and conditions of the share cancellation, including the number and class of shares being cancelled, any consideration being provided, tax implications, and necessary corporate approvals. It ensures compliance with relevant Canadian corporate legislation, securities regulations, and tax laws while protecting the interests of both the corporation and the affected shareholders.

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What is a Share Cancellation Agreement?

The Share Cancellation Agreement is a crucial document used in Canadian corporate restructuring, share capital reorganization, or share buyback scenarios. It becomes necessary when a corporation needs to cancel previously issued shares, whether as part of a corporate reorganization, succession planning, or shareholder exit strategy. The agreement must comply with the Canada Business Corporations Act (CBCA) or applicable provincial corporate legislation, depending on the jurisdiction of incorporation. This document typically includes detailed information about the shares being cancelled, consideration (if any), tax implications, necessary corporate and regulatory approvals, and releases. It's particularly important for ensuring proper documentation of the transaction, maintaining corporate records, and addressing potential tax and legal implications of the share cancellation.

What sections should be included in a Share Cancellation Agreement?

1. Parties: Identification of the corporation and the shareholder(s) whose shares are being cancelled

2. Background: Context of the share cancellation, including reasons and corporate authority for the cancellation

3. Definitions: Key terms used throughout the agreement

4. Share Details: Specific details of the shares to be cancelled, including class, number, and certificate numbers

5. Cancellation Terms: Core terms of the cancellation, including the effective date and process

6. Consideration: Details of any payment or other consideration for the cancelled shares

7. Representations and Warranties: Standard representations from both the corporation and the shareholder

8. Release: Mutual release of claims related to the cancelled shares

9. Tax Matters: Acknowledgment of tax implications and responsibilities

10. Further Assurances: Commitment to execute additional documents if needed

11. Governing Law: Specification of applicable Canadian jurisdiction

12. Execution: Signature blocks and execution requirements

What sections are optional to include in a Share Cancellation Agreement?

1. Regulatory Compliance: Required for public companies or when specific regulatory approvals are needed

2. Survival: Specifies which provisions survive completion of the cancellation

3. Confidentiality: Required when parties wish to keep the terms of cancellation private

4. Third Party Rights: Needed when the shares are subject to third-party interests or rights

5. Shareholder Approval: Required when other shareholders' approval is necessary

6. Notice: Include when ongoing notices may be required post-cancellation

7. Dispute Resolution: Optional mechanism for resolving disputes about the cancellation

What schedules should be included in a Share Cancellation Agreement?

1. Schedule A - Share Certificate Details: Copy or details of the share certificates to be cancelled

2. Schedule B - Board Resolution: Copy of the board resolution authorizing the share cancellation

3. Schedule C - Shareholder Resolution: If required, copy of the shareholder resolution approving the cancellation

4. Schedule D - Consideration Details: If applicable, detailed breakdown of consideration for cancelled shares

5. Schedule E - Tax Election Forms: If applicable, copies of required tax forms

6. Appendix 1 - Corporate Registry Forms: Required forms for filing with corporate registry

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Publisher

Genie AI

Document Type

Stock Agreement

Cost

Free to use
Relevant legal definitions
Relevant Industries

Financial Services

Professional Services

Technology

Manufacturing

Real Estate

Energy

Mining

Retail

Healthcare

Transportation

Agriculture

Construction

Telecommunications

Education

Media and Entertainment

Relevant Teams

Legal

Finance

Corporate Secretariat

Tax

Treasury

Compliance

Corporate Governance

Shareholder Relations

Board of Directors

Executive Management

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Corporate Secretary

Legal Counsel

Corporate Lawyer

Tax Director

Finance Director

Company Director

Board Member

Compliance Officer

Corporate Governance Officer

Investment Manager

Shareholder Relations Manager

Treasury Manager

Financial Controller

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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