A Quebec Shareholders' Agreement (Convention entre actionnaires) is a private contract among the shareholders of a corporation incorporated under the Loi sur les sociétés par actions du Québec (LSAQ, RLRQ, chapter S-31.1) that establishes the rules governing their relationship, share transfers, corporate governance, and exit mechanisms. Unlike shareholders' agreements in common law provinces of Canada, Quebec shareholders' agreements operate within the framework of the Code civil du Québec (CCQ), a comprehensive civil law system derived from French civil law tradition rather than English common law.

The LSAQ, which replaced the former Loi sur les compagnies in 2011, provides the statutory framework for Quebec business corporations and recognizes two types of shareholder agreements: (1) non-unanimous agreements that bind only the signing shareholders, and (2) convention unanime des actionnaires (articles 213-214 LSAQ) signed by all shareholders, which has the unique legal effect of restricting or removing the board of directors' powers and transferring those powers and corresponding liabilities to the shareholders themselves.

A critical distinction in Quebec corporate law is the mandatory obligation of bonne foi (good faith) imposed by article 1375 of the Code civil du Québec on all contractual relationships. This obligation permeates every clause of the shareholders' agreement and affects how rights such as shotgun clauses, drag-along provisions, and transfer restrictions are exercised. Quebec courts have consistently held that a contractual right exercised in bad faith may give rise to liability under articles 1457 and 1458 CCQ, even if the exercise technically complies with the letter of the agreement.

When two or more individuals are incorporating a business in Quebec under the LSAQ and need to define their respective ownership stakes, voting rights, management roles, and exit mechanisms before the first shares are issued, preventing the default statutory rules from governing their relationship in this civil law jurisdiction.

When a Quebec corporation is raising capital from investors who require a shareholders' agreement that includes anti-dilution protections, information rights, board representation, right of first refusal on future share issuances, and liquidation preferences, all structured to comply with Quebec civil law rather than common law principles.

When a family business organized as a Quebec corporation needs to address succession planning in accordance with the CCQ's rules on devolution of estates (articles 625 and following), share transfer restrictions to keep ownership within the family, and valuation methodology for buying out departing family members.

When equal shareholders in a Quebec corporation need a deadlock resolution mechanism such as a shotgun (buy-sell) clause, mediation, or arbitration under the Code de procédure civile du Québec (Livre VII) to prevent complete operational paralysis when shareholders cannot agree on fundamental business decisions.

When shareholders wish to establish a convention unanime des actionnaires under articles 213-214 LSAQ to restrict the powers of the board of directors and exercise those powers directly, which must be declared at the Registraire des entreprises du Québec under the Loi sur la publicité légale des entreprises.

Share Transfer Restrictions and Droit de Premier Refus — Right of first refusal provisions that give existing shareholders the opportunity to purchase shares at the same price and conditions before they can be sold to a third party. These restrictions must comply with the LSAQ's provisions on share transfers and the CCQ's general rules on contractual obligations.

Shotgun (Buy-Sell) Clause — A deadlock resolution mechanism common in Quebec corporate practice where one shareholder offers to buy the other's shares at a specified price per share. The recipient must either sell at that price or buy the offeror's shares at the same price. Under Quebec law, this clause is subject to the bonne foi obligation of article 1375 CCQ.

Drag-Along and Tag-Along Rights — Sortie forcée (drag-along) allows majority shareholders to compel minority shareholders to sell on the same terms. Sortie conjointe (tag-along) protects minority shareholders by giving them the right to participate in any sale on the same terms offered to the majority. These provisions must be exercised in accordance with the CCQ's good faith requirements.

Conseil d'Administration — How the board of directors is composed, including the number of directors, quorum requirements, and which decisions require a supermajority or unanimous shareholder vote. Under the LSAQ, directors must act with prudence, diligence, honesty, and loyalty in the best interests of the corporation (article 119 LSAQ).

Dividend Policy — Whether dividends are declared at the board's discretion or according to a formula, the frequency of distributions, and compliance with the solvency test under article 104 LSAQ which prohibits dividends that would render the corporation unable to pay its debts as they become due.

Non-Competition Clause — Under article 2089 CCQ, non-competition clauses must be limited in time, place, and type of activity to be enforceable. Unlike common law provinces where courts may read down an unreasonable clause (blue-pencil doctrine), Quebec courts may strike down an unreasonable non-competition clause entirely.

Governing Law and Dispute Resolution — The agreement must be governed by the laws of the Province de Québec and federal laws of Canada. Disputes may be resolved through arbitration under Livre VII of the Code de procédure civile du Québec, mediation, or litigation before the Cour supérieure du Québec.

Bonne Foi (Good Faith) — Article 1375 CCQ requires all parties to exercise their rights and perform their obligations in good faith. This overriding principle affects every aspect of the shareholders' agreement and distinguishes Quebec corporate law from common law jurisdictions where the duty of good faith is more limited in scope.