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The Shareholder Promissory Note is a crucial document in Canadian corporate finance, typically used when a shareholder provides financial support to a corporation through a loan rather than an equity investment. This approach may be chosen for tax efficiency, maintaining existing ownership percentages, or addressing short-term capital needs. The document must comply with Canadian federal laws including the Canada Business Corporations Act and provincial securities regulations. It includes essential elements such as the loan amount, interest rate, payment schedule, default provisions, and any security arrangements. The note may also need to address specific requirements for shareholder loans under Canadian tax law and corporate governance requirements.

1. Parties: Identification of the Maker (corporation) and the Payee (shareholder), including full legal names and addresses

2. Background: Context of the promissory note, including reference to the shareholder relationship and any relevant corporate resolutions

3. Definitions: Key terms used throughout the document, including 'Business Day', 'Interest Rate', 'Maturity Date', etc.

4. Promise to Pay: The fundamental promise to pay, stating the principal amount, currency, and basic payment terms

5. Interest Rate: Specification of the interest rate, calculation method, and payment frequency

6. Payment Terms: Detailed payment schedule, including installment amounts, dates, and method of payment

7. Prepayment Rights: Terms governing early payment of the note, including any penalties or bonuses

8. Events of Default: Circumstances constituting default and consequences thereof

9. Remedies: Rights and remedies available to the Payee upon default

10. Notice: Requirements for giving notice under the note

11. Governing Law: Specification of applicable Canadian jurisdiction

12. Signature Block: Execution section with date and authorized signatures