What happens if my co-owner and I never signed anything formal when we started the business together?

Without a shareholders' agreement, or a partnership agreement if you never incorporated, you're generally left relying on default rules — Ontario's Business Corporations Act for a corporation, or the Partnerships Act if you're operating as an unincorporated partnership — which tend to be far less protective and less specific than a properly negotiated agreement, particularly around what happens on disagreement, departure, or a buyout.

This often means there's no shotgun clause, no agreed valuation method, and no clear process for one owner to exit or force a resolution if things go sideways, leaving negotiation, or in serious cases a court application, as the main paths forward. If your relationship is currently workable, the single most useful thing you can do now is put a proper shareholders' or partnership agreement in place before a dispute arises, since these documents are far easier to negotiate calmly while things are going well than after a disagreement has already started.