By David Hobbs
The share structure of a corporation is established by the terms of the corporation’s articles. The structure may change after incorporation by appropriate resolution of the shareholders and other implementation steps. Articles are required to specify classes of shares and the maximum number of shares the corporation is authorized to issue. In some instances the maximum is unlimited.
There is no limit on the number of classes of shares a corporation may have. If there is more than one class of shares the rights and restrictions will be set out in the articles. If there is only one class of shares those shares, at a minimum, must have:
a. the right to vote;
b. the right to receive dividends, if declared by the board of directors; and
c. the right to receive any property remaining after satisfaction of all liabilities, if the corporation is dissolved.
Articles may be amended by directors’ resolution or, in some instances, a special resolution of shareholders may be required.
Shares represent an ownership interest in the corporation in the nature of personal property. A person or other form of legal entity, like another corporation, trust or mutual fund, can own shares in a corporation.
Usually a single share represents one vote at a shareholders’ meeting or by consent resolution.
An individual may be a shareholder, director and officer of a corporation all at the same time.
A person may become a shareholder by allotment from the corporation’s treasury or by purchasing shares from another shareholder.
In addition to the rights above, shareholders are entitled to be notified of meetings, elect directors, approve matters requiring shareholder resolutions, waive or appoint auditors,examine certain corporation records, financial statements and directors’ reports to shareholders and approve fundamental changes requiring shareholder approval either by majority, special or unanimous resolution as the case may be.
Shares may have conditions attached to them or be restricted by shareholder agreement provisions. Directors normally have to approve share transfers. Share ownership is recorded in the share or security register of the corporation by class.
Ordinary resolutions require a simple majority. Special resolutions require a higher percentage of vote and are usually needed for approval for more important matters such as any fundamental change or sale of all, or substantially all, of the corporation’s assets. Agreement not to appoint and appointment of auditors requires a unanimous resolution.
Hobbs Giroday has incorporated numerous companies and acts as the registered and records office for many companies. Hobbs Giroday has many years of experience advising and acting for shareholders, officers, directors and corporations in commercial, corporate and shareholder disputes.
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