Chapter 3 - Partners and Shareholders

What is a shareholder agreement often alternatively called?

• Corporate Governance Agreement

• Share Transfer Agreement

• Partnership Agreement

• Buy-Sell Agreement

What is a potential consequence of failing to establish a shareholder agreement?

• Increased profits

• Nothing but trouble

• Enhanced collaboration

• Improved market position

Who should review shareholder agreements for tax consequences?

• Financial Advisors

• Business Consultants

• Certified Public Accountants (CPA)

• Lawyers

What is a key clause in a shareholder agreement regarding share transfers?

• Shares can be freely transferred

• All shareholders must agree to transfers

• Shares must be sold at market value

• Transfer of shares should be restricted

In the example provided, who did Pierre sell his shares to?

• Max

• Louie

• Tom

• Barb

What should a shareholder do before selling their shares according to the agreement?

• Sell them to the highest bidder

• Offer them to the corporation first

• Transfer them to family members

• Hold onto them indefinitely

What is the valuation formula based on in the example?

• Market share

• Net income multiplied by a factor

• Total sales

• Asset value

What does EBIDTA stand for?

• Earnings Before Interest, Taxes, Dividends and Assets

• Earnings Before Investment, Taxes, Depreciation and Assets

• Earnings Before Income, Taxes, Dividends and Amortization

• Earnings Before Interest, Taxes, Depreciation and Amortization

What must majority shareholders ensure when structuring the agreement?

• They can act without restrictions

• They act within the bounds of state law

• They can change the agreement at any time

• They can ignore minority shareholders

What should be included in the agreement to handle disputes?

• A mechanism for dispute resolution

• A requirement for mediation

• A clause for arbitration

• A list of penalties