Under Canadian corprate law 8.1 The Shareholders
Becoming and ceasing to be a shareholder
A person becomes a shareholder by buying shares, either from the corporation or from an existing shareholder. For example, a person may:
- purchase shares not previously issued by the corporation (referred to as “buying shares from treasury”), either on incorporation or later; or
- buy shares from an existing shareholder (according to the terms set out in the Articles of Incorporation) and have the corporation register the transfer.
A person ceases to be a shareholder once his or her shares are sold either to a third party or back to the corporation (in accordance with the terms of the Articles of Incorporation) or when the corporation is dissolved. Please note that there is no need to notify Corporations Canada when a person becomes or ceases to be a shareholder.
Rights and responsibilities of shareholders
After paying for their shares, shareholders have the right to:
- vote at the shareholders' meeting (according to the class of shares);
- share in the profits (dividends) of the corporation (according to the class of shares);
- share in the property of the corporation upon dissolution;
- be called to and participate in shareholders' meetings;
- elect and dismiss directors;
- approve by-laws and by-law changes;
- appoint the auditor of the corporation (or waive the requirement for an auditor);
- examine and copy corporate records, financial statements and directors' reports;
- receive the corporation's financial statements at least 21 days before each annual meeting; and
- approve major or fundamental changes (such as those affecting a corporation's structure or business activities).
The shareholders' liability in a corporation is limited to the amount they paid for their shares; shareholders are usually not liable for the corporation's debts. At the same time, shareholders usually do not actively run the corporation.