Starting a business with a partner is often a decision made in the excitement of the moment — a promising idea, mutual trust, a shared vision. What rarely comes to mind at that point is the question of what will happen if one partner wants to leave, if priorities diverge, or if the business experiences unexpected success that reshapes the stakes. Putting these questions in writing from the outset is not a sign of distrust: it is simply a way of protecting what you have built together.
What a Verbal Agreement Cannot Do
Between people who trust each other, it is tempting to rely on a handshake and a tacit understanding of each person's role. But a verbal agreement has no memory. Over time, interpretations diverge, circumstances change, and what once seemed obvious becomes a source of friction.
Under Quebec law, business partnerships and corporations are governed by specific rules — notably the Civil Code of Quebec and, in the case of share corporations, the Business Corporations Act (Quebec). These laws provide default provisions, but they do not necessarily reflect what the partners had in mind when they joined forces. A custom-drafted agreement allows you to go beyond these general provisions and establish rules tailored to your actual situation.
What a Shareholder Agreement Should Cover
A well-crafted shareholder or partnership agreement goes further than simply dividing up shares. It addresses concrete situations that partners may instinctively avoid thinking about — precisely because those situations seem remote at the time of signing.
The Basic Elements
- Each partner's contributions: money, equipment, expertise, time — and their relative value within the structure.
- Roles and responsibilities: who makes which decisions, and at what threshold a decision must be made jointly.
- Profit and loss sharing: according to what formula, how often, and under what circumstances this may change.
Exit and Crisis Scenarios
This is often where the gaps are felt most acutely. What happens if a partner wishes to leave the business? If one of them passes away or becomes unable to work? If both want to sell, but a third party disagrees on the value?
A well-drafted agreement provides mechanisms for these situations: a buy-out clause, right of first refusal, a process for valuing shares, or terms for dissolution. Anticipating these scenarios before they arise — and before emotions are involved — fundamentally changes the nature of any negotiations.
The Role of the Notary in This Process
The notary plays several roles in structuring a business partnership. They can draft or authenticate corporate documents, advise on the appropriate legal form for your project, and ensure that the agreements reached comply with Quebec law.
In Laval and the greater Montreal area, many entrepreneurs launch their business without ever consulting a legal professional at this stage — and it is often at the first serious disagreement that they realize what this step could have spared them.
The notary does not replace a lawyer specializing in corporate law, but plays a complementary role in formalizing and securing agreements. Me Petrulian will explain the specifics during your consultation based on the precise nature of your project.
Why Acting Early Costs Less
Drafting an agreement at the time the business is created is a preventive step. The cost — in time, professional fees, and energy — is incomparable to what an undocumented dispute between partners represents: legal proceedings, paralysis of the business, and loss of accumulated value.
The earlier the agreement is drafted, the more it reflects a relationship that is still healthy between the partners. That is precisely why it is better to address these matters before the first difficulty arises.
Consult Groupe Synergie Notaires
To structure your business partnership on solid ground, the team at Groupe Synergie Notaires is available to guide you. Book an appointment by calling (514) 399-1009 or write to us at info@gsnotaires.com. Our office is located at 67 boulevard Samson, in Laval (Sainte-Dorothée).
Frequently Asked Questions
Is a verbal agreement between partners valid in Quebec?
A verbal agreement may have legal value, but it is difficult to prove and enforce in the event of a dispute. A written agreement remains the most reliable way to document each partner's rights and obligations.
Do I need a notary or a lawyer to draft a shareholder agreement?
Either may be involved depending on the nature of the document and the structure of the business. A notary can draft and authenticate certain corporate documents; it is advisable to consult a legal professional to determine who is best suited to your situation.
When should a shareholder agreement be drafted?
Ideally, before the business is even officially launched — when the relationship between partners is healthy and decisions can be made without pressure. Waiting until a problem arises generally complicates negotiations.
The content of this article is provided for informational purposes only and does not constitute legal advice. As every situation is unique, it is recommended that you consult a professional to obtain advice tailored to your particular circumstances.
This text is provided for informational purposes only and does not constitute legal advice. As each situation is unique, it is recommended that you consult a professional to obtain advice tailored to your particular situation.