An Equity Split Agreement is a crucial document used when establishing or restructuring company ownership in the Canadian business context. This agreement is particularly vital for startups, growing businesses, and companies undergoing ownership transitions. It defines how company equity is divided among founders, investors, and key employees, incorporating specific requirements under Canadian federal and provincial legislation. The document typically includes detailed provisions for share allocation, vesting schedules, transfer restrictions, and shareholder rights, while ensuring compliance with the Canada Business Corporations Act and relevant securities regulations. It's essential for protecting all stakeholders' interests and preventing future disputes over ownership and control.
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1. Parties: Identification of all parties entering into the agreement, including full legal names and addresses
2. Background: Context of the agreement, including company information and purpose of the equity split
3. Definitions: Detailed definitions of key terms used throughout the agreement
4. Equity Allocation: Specification of how shares or ownership interests are divided among the parties
5. Vesting Provisions: Details of vesting schedule, including timing and conditions for share vesting
6. Transfer Restrictions: Limitations and conditions on the transfer of shares
7. Shareholders' Rights: Voting rights, dividend rights, and other shareholder privileges
8. Management and Control: Decision-making authority and corporate governance provisions
9. Representations and Warranties: Statements of fact by the parties about their capacity and authority
10. Confidentiality: Provisions protecting confidential information
11. Termination: Circumstances and procedures for terminating the agreement
12. General Provisions: Standard clauses including governing law, notices, and amendments
1. Right of First Refusal: Gives existing shareholders priority rights to purchase shares before they can be sold to third parties
2. Tag-Along Rights: Allows minority shareholders to join in the sale of shares by majority shareholders
3. Drag-Along Rights: Enables majority shareholders to force minority shareholders to join in the sale of the company
4. Anti-Dilution Protection: Protects shareholders from equity dilution in future financing rounds
5. Intellectual Property Assignment: Required when shareholders are also contributing IP to the company
6. Non-Competition and Non-Solicitation: Needed when shareholders are involved in company operations
7. Death and Disability Provisions: Procedures for handling shares in case of shareholder death or disability
8. Dispute ReΊμΠΣΦ±²₯: Specific procedures for resolving disputes, including mediation or arbitration
1. Schedule A - Share Capitalization Table: Detailed breakdown of share ownership percentages and classes
2. Schedule B - Vesting Schedule: Detailed timeline and milestones for share vesting
3. Schedule C - Shareholders' Contact Information: Complete contact details for all shareholders
4. Schedule D - Company Valuation: Current company valuation and methodology used
5. Schedule E - Share Transfer Form: Standard form for executing share transfers
6. Appendix 1 - Corporate ReΊμΠΣΦ±²₯: Board reΊμΠΣΦ±²₯ approving the equity split arrangement
7. Appendix 2 - Shareholders' Rights by Share Class: Detailed breakdown of rights associated with different share classes
Authors
Relevant legal definitions
Clauses
Relevant Industries
Technology
Startups
Professional Services
Manufacturing
Retail
Healthcare
Financial Services
Real Estate
Media and Entertainment
Consulting
Software Development
Biotechnology
Clean Energy
E-commerce
Relevant Teams
Legal
Executive Leadership
Corporate Development
Finance
Governance
Human Resources
Business Development
Investment
Operations
Administrative
Relevant Roles
CEO
CFO
Corporate Lawyer
Legal Counsel
Company Secretary
Business Development Director
Founder
Co-founder
Board Director
Chief Legal Officer
Investment Manager
Venture Capital Partner
Corporate Governance Officer
Startup Advisor
Financial Controller
Managing Partner
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