Ontario Share Purchase Agreement Template

What an Ontario share purchase agreement is for

When someone buys an Ontario business by buying its shares, they buy the company itself, with everything it owns and everything it owes. The customers, contracts, employees, permits and bank accounts carry on uninterrupted, which is often why both sides prefer a share sale. But the buyer also takes on the company's history: an old tax reassessment, an unpaid supplier, a wrongful dismissal claim, an expired permit. A share purchase agreement deals with that risk through detailed representations from the sellers, a disclosure schedule that lists the exceptions, indemnities if something proves untrue, and a holdback to pay for them.

This template is a full share purchase agreement for a privately held Ontario corporation. It sets a cash-free, debt-free price with a working capital adjustment and a final closing statement, offers holdback, vendor take-back and earn-out options, gives twenty-three representations with a matching disclosure schedule, sets pre-closing covenants and conditions, lists closing deliveries including the ISC register update, and provides indemnities with survival periods, a basket and a cap. Tax terms, employees, a seller non-compete and a Sellers' representative round it out.

When to use it

Use it to buy or sell all the shares of an owner-managed Ontario company: a manufacturer, distributor, professional services firm, software company, trades business or retailer, typically worth from a few hundred thousand to several million dollars. It works where one or several shareholders, including holding companies, are selling.

It is not designed for buying only some of the shares, for companies with outside investors or public company shareholders, or for regulated businesses (such as professional corporations or licensed financial firms) whose ownership changes need regulatory approval. A buyer should complete due diligence before signing, and each side needs its own lawyer and accountant.

What's inside

The full list of sections and fields in this template, in the order they appear.

1. Parties and definitions

   • Sellers
   • Buyer
   • Corporation
   • Purchased Shares
   • Closing and Effective Time
   • Working Capital
   • Indebtedness
   • Disclosure Schedule

2. Price

   • Base Price cash-free debt-free
   • Deposit
   • Closing payment
   • Holdback
   • Vendor take-back note
   • Earn-out
   • Cash and debt adjustments
   • Working capital target
   • Final closing statement and expert determination

3. Representations

   • Capacity and residence
   • Title to shares
   • Corporate status and registers
   • Financial statements
   • Liabilities
   • Assets and contracts
   • Leases and IP
   • Compliance and litigation
   • Employees and remittances
   • Tax and CCPC status
   • Full disclosure
   • Buyer's representations

4. Before closing

   • Due diligence access
   • Ordinary course covenants
   • Change-of-control consents
   • Pre-closing reorganization

5. Closing

   • Buyer's and Sellers' conditions
   • Outside date and deposit
   • Sellers' deliveries
   • Buyer's deliveries
   • ISC register and Ontario Business Registry

6. Indemnities and covenants

   • Sellers' indemnity
   • Pre-closing taxes
   • Specific indemnities
   • Survival periods
   • Basket and cap
   • Holdback and set-off
   • Claims procedure
   • Non-competition and non-solicitation

7. Tax, employees and general

   • Tax returns and acquisition-of-control year end
   • Section 56.4 election
   • Lifetime capital gains exemption
   • Employees
   • Confidentiality
   • Termination
   • Sellers' representative
   • Governing law

8. Schedules A to D

   • Sellers and shares
   • Disclosure schedule
   • Pre-closing reorganization
   • Closing checklist

Preview pages

How to complete the agreement

1. Fill in Schedule A. List each seller, their shares and their share of the price.
2. Set the price. Base Price, deposit, holdback percentage and period, and any VTB or earn-out.
3. Agree the working capital target. Use an average of recent months from the financial statements.
4. Review the representations and complete the disclosure schedule against each one.
5. Plan any pre-closing reorganization with the sellers' accountant and record it in Schedule C.
6. Set the conditions and outside date. Landlord consent, financing, due diligence, key employees.
7. Agree the indemnity terms. Basket, cap, survival periods and specific indemnities.
8. Set the non-compete narrowly in time, area and activity.
9. Close with the checklist, then deliver the final closing statement within 90 days.

Example: the closing statement

A fictional buyer, Lakeshore Holdings Inc., buys all the shares of Tri-County Signworks Ltd. of London, Ontario from its two founders for a Base Price of $2,400,000, closing June 30, 2026, with a working capital target of $300,000.

At closing: cash $85,000 (added); bank loan and shareholder loans $410,000 (deducted and paid out); working capital $270,000, $30,000 below target (deducted). Adjusted price: $2,400,000 + $85,000 − $410,000 − $30,000 = $2,045,000. Holdback: $240,000 (10% of the Base Price) held for 18 months. After closing: in March 2027 a $46,000 HST reassessment for 2025 arrives; Lakeshore claims it from the holdback under the pre-closing tax indemnity, and the rest of the holdback is released on December 31, 2027.

Ontario rules to know

• Share transfers and records (OBCA). Transfers are approved by director resolution and entered in the securities register; the register of individuals with significant control must be updated within 15 days.
• Ontario Business Registry. Changes in directors and officers are reported through a notice of change.
• Non-resident sellers (Income Tax Act section 116). A buyer from a non-resident must obtain a clearance certificate or withhold.
• Acquisition of control (section 249(4)). The corporation's tax year ends immediately before the change of control.
• Lifetime capital gains exemption (section 110.6). Available to individuals selling qualifying small business corporation shares.
• Restrictive covenants. Seller non-competes are reviewed more generously than employee ones but must be reasonable; the ESA's sale-of-business exception applies to sellers who stay on.
• Securities law. Private company share sales rely on the private issuer exemption under NI 45-106.

Where share purchases go wrong

The disputes that follow small share purchases are familiar. The price was fixed with no working capital adjustment, and the buyer inherited a pile of unpaid bills. Representations were given without a disclosure schedule, so a known issue became an indemnity claim. There was no holdback, and recovering a tax reassessment meant suing the sellers. The landlord's consent to a change of control was never obtained. The non-compete covered all of Canada and was struck out. The adjustment mechanism, disclosure schedule, holdback, consents condition and narrow covenant in this agreement address each of these.