Shareholders of a Canadian Company

Updated on Tuesday 12th March 2019

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Opening a company in Canada implies several steps, among which the first one is selecting the business form. Then, the shareholders and the company directors need to be appointed, the share capital needs to be secured and the preparation of the company’s statutory documents need to be filed with the territorial or federal Trade Register in order to have a fully functional company.

Among these steps, nominating the shareholders of the company is essential, as they are also the owners or stockholders of the Canadian business. Becoming a shareholder in a Canadian company is not complicated and implies obtaining certain rights, but also fulfilling certain obligations towards the other participants in the company.

Below, our company formation agents in Canada explain the rights and obligations of shareholders in local companies. We can also help you open a company in Canada.
 

Becoming a shareholder in a Canadian company


The shareholders also known as stockholders in North America, represent the owners of a company in Canada. Based on the Company Law, the role of a shareholder can be taken by one or more individuals or companies. It is also important to note that only private and public companies in Canada can have shareholders.

There are two ways of becoming a shareholder in a Canadian company:
 
  •           by being one of the founders of the company, meaning the owner of the company from its beginning;
  •           by purchasing shares in an existing company.

There are two types of shareholders in Canada: the majority and the minority shareholders.

Our company registration consultants in Canada can offer more information on the conditions imposed by the Company Law with respect to becoming a shareholder in a local business.
 

The rights of shareholders in Canadian companies


As business owners, the shareholders will have several rights when it comes to the Canadian company. Among these rights are:
 
  1.           the right of receiving the profits of the company under the form of dividends or other forms;
  2.           the right of appointing company directors and other officers in the Canadian company;
  3.           the right of being informed about the activities of the company and its ongoing development;
  4.           the right of making decisions related to the changes, including the dissolution of the company;
  5.           the right of attending the most important meetings in the company and of organizing them;
  6.           the right of dismissing any company director, in accordance with the provisions of the company’s Articles of Association and bylaws;
  7.           the right of receiving information about the financial status of the company at any time.

The shareholders are the ones issuing the shares in the Canadian companies. With respect to this, it is important to notice that there are several types of shares which can be issued, however, if only one type of shares is issued, it must bear voting rights.

If you are interested in setting up a company in Canada and need guidance on the conditions imposed by the law on shareholders, our local specialists are at your disposal for clarifications.
 

The annual general meeting of shareholders in Canada


All companies in Canada are required to hold one annual general meeting which must be attended by the company’s shareholders. The meeting must be organized in accordance with the provisions stipulated in the Articles of Association and during it, the shareholders must be presented with:
 
  •           accurate information about the status of the company;
  •           the financial statements of the company during the past year;
  •           the auditor’s report on the financial status of the company.

During this meeting, the shareholders can also appoint or dismiss various members in the company, such as company directors and officers, including the auditor. It is also useful to know that the general meeting can be held via electronic means or via the Internet in Canada.

Our company registration advisors in Canada can offer more information on the requirements related to holding the general meeting of the shareholders.
 

FAQ on shareholders of Canadian companies


1. How many shareholders must a Canadian company have?
The minimum number of shareholders in a Canadian company is 1, no matter if it is a private or public company.

2. Can shares be transferred to other shareholders in the company?
Yes, the transfer of shares is permitted in Canadian companies.

3.Must the annual general meeting be held at a specific date?
Yes, the annual general meeting must be held as provided in the company’s statutory documents and in time for the financial documents to be filed with the Trade Register.

4.How to shareholders exercise their rights in a Canadian company?
The shareholders will exercise their right by passing ordinary or extraordinary resolutions.

5. Can shareholders be company directors?
Yes, it is possible for a shareholder to also act as a company director in Canada.

For more information on the right and obligations of company shareholders in Canada, please contact us. You can also rely on us if you need company formation services in Canada.