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  ONTARIO BUSINESS CORPORATIONS ACT 05/12/2009

Important Notice:  The following statute is subject to amendment and legislative changes, so particular attention should be directed to the date of the statute, with reference being made to the official government website for the most current version of a statute at www.e-laws.gov.on.ca.

PART III

CORPORATE FINANCE

Shares
22. (1) Shares of a corporation shall be in registered form and shall be without nominal or par value. R.S.O. 1990, c. B.16, s. 22 (1).
Idem
(2) Shares with nominal or par value of a corporation incorporated before the 29th day of July, 1983 shall be deemed to be shares without nominal or par value. R.S.O. 1990, c. B.16, s. 22 (2).
Rights of shareholders
(3) Where a corporation has only one class of shares, the rights of the holders thereof are equal in all respects and include the rights,
(a) to vote at all meetings of shareholders; and
(b) to receive the remaining property of the corporation upon dissolution. R.S.O. 1990, c. B.16, s. 22 (3).
Idem
(4) The articles may provide for more than one class of shares and where they so provide,
(a) the rights, privileges, restrictions and conditions attaching to the shares of each class shall be set out therein; and
(b) each of the rights set out in subsection (3) shall be attached to at least one class of shares, but both such rights are not required to be attached to any one class. R.S.O. 1990, c. B.16, s. 22 (4).
Saving provision
(5) Despite subsection (4), the right of the holders of a class of shares to one vote for each share at all meetings of shareholders other than meetings of the holders of another class of shares, or to receive the remaining property of the corporation upon dissolution, need not be set out in the articles. R.S.O. 1990, c. B.16, s. 22 (5).
Shares within a class equal
(6) Except as provided in section 25, each share of a class shall be the same in all respects as every other share of that class. R.S.O. 1990, c. B.16, s. 22 (6).
Same rights, etc.
(7) The articles may provide that two or more classes of shares or two or more series within a class of shares may have the same rights, privileges, restrictions and conditions. 2006, c. 34, Sched. B, s. 5.
Issuance of shares
23. (1) Subject to the articles, the by-laws, any unanimous shareholder agreement and section 26, shares may be issued at such time and to such persons and for such consideration as the directors may determine. R.S.O. 1990, c. B.16, s. 23 (1).
Shares non-assessable
(2) Shares issued by a corporation are non-assessable and the holders are not liable to the corporation or to its creditors in respect thereof. R.S.O. 1990, c. B.16, s. 23 (2).
Fully-paid shares
(3) A share shall not be issued until the consideration for the share is fully paid in money or in property or past service that is not less in value than the fair equivalent of the money that the corporation would have received if the share had been issued for money. R.S.O. 1990, c. B.16, s. 23 (3).
Value determined by directors
(4) The directors shall, in connection with the issue of any share not issued for money, determine,
(a) the amount of money the corporation would have received if the share had been issued for money; and
(b) either,
(i) the fair value of the property or past service in consideration of which the share is issued, or
(ii) that such property or past service has a fair value that is not less than the amount of money referred to in clause (a). R.S.O. 1990, c. B.16, s. 23 (4).
Idem
(5) In determining the value of property or past service, the directors may take into account reasonable charges and expenses of organization and reorganization and payments for property and past service reasonably expected to benefit the corporation. R.S.O. 1990, c. B.16, s. 23 (5).
Interpretation of property
(6) For the purposes of subsection (3) and of subsection 24 (3), a document evidencing indebtedness of a person to whom shares are to be issued, or of any other person not dealing at arm’s length with such person within the meaning of that term in the Income Tax Act (Canada), does not constitute property. R.S.O. 1990, c. B.16, s. 23 (6).
Separate capital account
24. (1) A corporation shall maintain a separate stated capital account for each class and series of shares it issues. R.S.O. 1990, c. B.16, s. 24 (1).
Idem
(2) A corporation shall add to the appropriate stated capital account in respect of any shares it issues the full amount of the consideration it receives as determined by the directors which, in the case of shares not issued for money, shall be the amount determined by the directors in accordance with clause 23 (4) (a) or, if a determination is made by the directors in accordance with subclause 23 (4) (b) (i), the amount so determined. R.S.O. 1990, c. B.16, s. 24 (2).
Exceptions
(3) Despite subsection (2) and subsection 23 (3), a corporation may, subject to subsection (4), add to the stated capital accounts maintained for the shares of classes or series the whole or any part of the consideration that it receives in exchange if the corporation issues shares,
(a) in exchange for,
(i) property of a person who immediately before the exchange did not deal with the corporation at arm’s length within the meaning of that term in the Income Tax Act (Canada),
(ii) shares of, or another interest in, a body corporate that immediately before the exchange, or that because of the exchange, did not deal with the corporation at arm’s length within the meaning of that term in the Income Tax Act (Canada), or
(iii) property of a person who, immediately before the exchange, dealt with the corporation at arm’s length within the meaning of that term in the Income Tax Act (Canada), if the person, the corporation and all holders of shares in the class or series of shares so issued consent to the exchange; or
(b) under an agreement referred to in subsection 175 (1) or an arrangement referred to in clause (c) or (d) of the definition of “arrangement” in subsection 182 (1) or to shareholders of an amalgamating corporation who receive the shares in addition to or instead of securities of the amalgamated corporation. 2006, c. 34, Sched. B, s. 6.
Consent not required
(3.1) The consent referred to in subclause (3) (a) (iii) is not required if the issuance of the shares does not result in a decrease in the value of the stated capital account maintained for the class or series divided by the number of shares in the class or series. 2006, c. 34, Sched. B, s. 6.
Addition to stated capital account
(4) On the issue of a share, a corporation shall not add to a stated capital account in respect of the share an amount greater than the amount referred to in subsection (2). R.S.O. 1990, c. B.16, s. 24 (4).
Stated capital at time of coming into force or continuance
(5) Despite subsection (2), on the 29th day of July, 1983 or at such time thereafter as a corporation has been continued under this Act, as the case may be, the amount in the stated capital account maintained by a corporation in respect of each class or series of shares then issued shall be equal to the aggregate amount paid up on the shares of each such class or series of shares immediately prior thereto, and, after such time, a corporation may, upon complying with subsection (6), add to the stated capital account maintained by it in respect of any class or series of shares any amount it has credited to a retained earnings or other surplus account. R.S.O. 1990, c. B.16, s. 24 (5).
Additions to stated capital account
(6) Where a corporation proposes to add any amount to a stated capital account that it maintains in respect of a class or series of shares otherwise than under subsection 38(2), the addition to the stated capital account must be approved by special resolution if,
(a) the amount to be added,
(i) was not received by the corporation as consideration for the issue of shares, or
(ii) was received by the corporation as consideration for the issue of shares but does not form part of the stated capital attributable to such shares; and
(b) the corporation has outstanding shares of more than one class or series. R.S.O. 1990, c. B.16, s. 24 (6).
Idem
(7) Where a class or series of shares of a corporation would be affected by the addition of an amount to any stated capital account under subsection (6) in a manner different from the manner in which any other class or series of shares of the corporation would be affected by such action, the holders of the differently affected class or series of shares are entitled to vote separately as a class or series, as the case may be, on the proposal to take the action, whether or not such shares otherwise carry the right to vote. R.S.O. 1990, c. B.16, s. 24 (7).
Expressed in one or more currencies
(8) Stated capital accounts of a corporation may be expressed in one or more currencies. R.S.O. 1990, c. B.16, s. 24 (8).
Reduction in stated capital
(9) A corporation shall not reduce its stated capital or any stated capital account except in the manner provided in this Act. R.S.O. 1990, c. B.16, s. 24 (9).
Non-application of Act
(10) The provisions of this Act relating to stated capital do not apply to an open-end mutual fund. R.S.O. 1990, c. B.16, s. 24 (10).
Definition
(11) For the purposes of this section,
“open-end mutual fund” means an offering corporation that carries on only the business of investing the consideration it receives for the shares it issues, and all or substantially all the shares of which are redeemable upon the demand of the holders of such shares. R.S.O. 1990, c. B.16, s. 24 (11).
Special shares in series
25. (1) The articles, subject to the limitations set out in them,
(a) may authorize the issue of any class of shares in one or more series and may fix the number of shares in, and determine the designation, rights, privileges, restrictions and conditions attaching to the shares of, each series; and
(b) may, where the articles authorize the issue of any class of shares in one or more series, authorize the directors to fix the number of shares in, and to determine the designation, rights, privileges, restrictions and conditions attaching to the shares of each series. R.S.O. 1990, c. B.16, s. 25 (1).
Proportionate abatement
(2) If any amount,
(a) of cumulative dividends, whether or not declared, or declared non-cumulative dividends; or
(b) payable on return of capital in the event of the liquidation, dissolution or winding up of a corporation,
in respect of shares of a series is not paid in full, the shares of the series shall participate rateably with the shares of all other series of the same class in respect of,
(c) all accumulated cumulative dividends, whether or not declared, and all declared non-cumulative dividends; or
(d) all amounts payable on return of capital in the event of the liquidation, dissolution or winding up of the corporation,
as the case may be. R.S.O. 1990, c. B.16, s. 25 (2).
No priority of shares of same class
(3) No rights, privileges, restrictions or conditions attached to a series of shares authorized under this section shall confer upon the shares of a series a priority in respect of,
(a) dividends; or
(b) return of capital in the event of the liquidation, dissolution or winding up of the corporation,
over the shares of any other series of the same class. R.S.O. 1990, c. B.16, s. 25 (3).
Articles designating special shares
(4) Where, in respect of a series of shares, the directors exercise the authority conferred on them, before the issue of shares of such series, the directors shall send to the Director articles of amendment in the prescribed form designating such series. R.S.O. 1990, c. B.16, s. 25 (4).
Certificate re special shares
(5) On receipt of articles of amendment designating a series of shares under subsection (4), the Director shall endorse thereon, in accordance with section 273, a certificate which shall constitute the certificate of amendment. R.S.O. 1990, c. B.16, s. 25 (5).
Pre-emptive rights
26. If it is so provided in the articles or a unanimous shareholder agreement, no shares of a class or series shall be issued unless the shares have first been offered to the shareholders of the corporation holding shares of that class or series or of another class or series on such terms as are provided in the articles or unanimous shareholder agreement. R.S.O. 1990, c. B.16, s. 26.
Conversion privileges, etc.
27. (1) A corporation may issue warrants as evidence of conversion privileges or options or rights to acquire securities of the corporation, and shall set out the conditions thereof,
(a) in certificates evidencing the securities to which the conversion privileges, options or rights are attached; or
(b) in separate certificates or other documents. R.S.O. 1990, c. B.16, s. 27 (1).
Idem
(2) Conversion privileges and options or rights to purchase securities of a corporation may be made transferable or non-transferable, and options or rights to purchase may be made separable or inseparable from any securities to which they are attached. R.S.O. 1990, c. B.16, s. 27 (2).
Corporation to maintain sufficient reserve
(3) Where a corporation has granted privileges to convert any securities, other than shares issued by the corporation, into shares of the corporation or has issued or granted options or rights to acquire shares of the corporation and where the articles limit the number of authorized shares, the corporation shall reserve and continue to reserve sufficient authorized shares to meet the exercise of such conversion privileges, options and rights. R.S.O. 1990, c. B.16, s. 27 (3).
Subsidiaries not to hold shares of holding bodies corporate
28. (1) Except as provided in subsection (2) and sections 29 to 32, a corporation,
(a) shall not hold shares in itself or in its holding body corporate; and
(b) shall not permit any of its subsidiary bodies corporate to hold shares of the corporation. R.S.O. 1990, c. B.16, s. 28 (1).
Disposal of shares
(2) A corporation shall cause a subsidiary body corporate of the corporation that holds shares of the corporation to sell or otherwise dispose of those shares within five years from the date the body corporate became a subsidiary of the corporation. R.S.O. 1990, c. B.16, s. 28 (2).
Exception to s. 28
29. (1) A corporation may in the capacity of a legal representative hold shares in itself or in its holding body corporate unless it or the holding body corporate or a subsidiary of either of them has a beneficial interest in the shares. R.S.O. 1990, c. B.16, s. 29 (1).
Idem
(2) A corporation may permit a subsidiary body corporate to hold shares of the corporation in the capacity of a legal representative unless the corporation or the subsidiary body corporate or a subsidiary of either of them has a beneficial interest in the shares. R.S.O. 1990, c. B.16, s. 29 (2).
Idem
(3) A corporation may hold shares in itself or in its holding body corporate by way of security for the purposes of a transaction entered into by it in the ordinary course of a business that includes the lending of money. R.S.O. 1990, c. B.16, s. 29 (3).
Exception relating to Canadian ownership
(4) A corporation may, for the purpose of assisting the corporation or any of its affiliates or associates to qualify under any prescribed Act of Canada or a province or ordinance of a territory to receive licences, permits, grants, payments or other benefits by reason of attaining or maintaining a specified level of Canadian ownership or control, hold shares in itself that,
(a) are not restricted for the purpose of assisting the corporation or any of its affiliates or associates to so qualify; or
(b) are shares into which shares held under clause (a) were converted by the corporation that are restricted for the purpose of assisting the corporation to so qualify and that were not previously held by the corporation. R.S.O. 1990, c. B.16, s. 29 (4).
Prohibited transfers
(5) A corporation shall not transfer shares held under subsection (4) to any person unless the corporation is satisfied, on reasonable grounds, that the ownership of the shares as a result of the transfer would assist the corporation or any of its affiliates or associates to achieve the purpose set out in subsection (4). R.S.O. 1990, c. B.16, s. 29 (5).
Where shares are transferred
(6) Where shares held under subsection (4) are transferred by a corporation, subsections 23 (1), (3), (4), (5) and (6), clause 127 (3) (c) and subsection 130 (1) apply, with such modifications as the circumstances require, in respect of the transfer as if the transfer were an issue. R.S.O. 1990, c. B.16, s. 29 (6).
Transfer not void
(7) No transfer of shares by a corporation shall be void or voidable solely because the transfer is in contravention of subsection (5). R.S.O. 1990, c. B.16, s. 29 (7).
Corporation holding shares in itself
(8) A corporation holding shares in itself or in its holding body corporate or a subsidiary body corporate of a corporation holding shares of the corporation shall not vote or permit those shares to be voted unless the corporation or subsidiary body corporate, as the case may be,
(a) holds the shares in the capacity of a legal representative; and
(b) has complied with section 49 of the Securities Act where that section is applicable. R.S.O. 1990, c. B.16, s. 29 (8).
Exception, conditions precedent
(9) A corporation may permit any of its subsidiary bodies corporate to acquire shares of the corporation through the issuance of those shares by the corporation to the subsidiary body corporate if, before the acquisition takes place, the conditions prescribed for the purposes of this subsection are met. 2006, c. 34, Sched. B, s. 7.
Conditions subsequent
(10) After the acquisition has taken place under the purported authority of subsection (9), the conditions prescribed for the purposes of this subsection shall be met. 2006, c. 34, Sched. B, s. 7.
Non-compliance with conditions
(11) If a corporation permits a subsidiary body corporate to acquire shares of the corporation under the purported authority of subsection (9) and either,
(a) one or more of the conditions prescribed for the purposes of subsection (9) were not met; or
(b) one or more of the conditions prescribed for the purposes of subsection (10) were not met or have ceased to be met,
then, despite subsections 17 (3) and 24 (2), the prescribed consequences apply in respect of the acquisition of the shares and their issuance. 2006, c. 34, Sched. B, s. 7.
Purchase of issued shares permitted
30. (1) Subject to subsection (2) and to its articles, a corporation may purchase or otherwise acquire any of its issued shares or warrants. R.S.O. 1990, c. B.16, s. 30 (1).
Where prohibited
(2) A corporation shall not make any payment to purchase or otherwise acquire shares issued by it if there are reasonable grounds for believing that,
(a) the corporation is or, after the payment, would be unable to pay its liabilities as they become due; or
(b) after the payment, the realizable value of the corporation’s assets would be less than the aggregate of,
(i) its liabilities, and
(ii) its stated capital of all classes. R.S.O. 1990, c. B.16, s. 30 (2).
Where s. 30 (2) does not apply
31. (1) Despite subsection 30 (2) but subject to subsection (3) of this section and to its articles, a corporation may purchase or otherwise acquire shares issued by it to,
(a) settle or compromise a debt or claim asserted by or against the corporation;
(b) eliminate fractional shares; or
(c) fulfil the terms of a non-assignable agreement under which the corporation has an option or is obliged to purchase shares owned by a current or former director, officer or employee of the corporation. R.S.O. 1990, c. B.16, s. 31 (1).
Idem
(2) Despite subsection 30 (2), a corporation may purchase or otherwise acquire shares issued by it to,
(a) satisfy the claim of a shareholder who dissents under section 185; or
(b) comply with an order under section 248. R.S.O. 1990, c. B.16, s. 31 (2).
Restriction on payment
(3) A corporation shall not make any payment to purchase or acquire under subsection (1) shares issued by it if there are reasonable grounds for believing that,
(a) the corporation is or, after the payment, would be unable to pay its liabilities as they become due; or
(b) after the payment, the realizable value of the corporation’s assets would be less than the aggregate of,
(i) its liabilities, and
(ii) the amount required for the payment on a redemption or in a liquidation of all shares where the holders have the right to be paid before the holders of the shares to be purchased or acquired, to the extent that the amount has not been included in its liabilities. R.S.O. 1990, c. B.16, s. 31 (3); 2006, c. 34, Sched. B, s. 8.
Redemption of shares
32. (1) Despite subsection 30 (2) and subsection 31 (3), but subject to subsection (2) and to its articles, a corporation may purchase or redeem any redeemable shares issued by it at prices not exceeding the redemption price thereof stated in the articles or calculated according to a formula stated in the articles. R.S.O. 1990, c. B.16, s. 32 (1).
Restriction on redemption
(2) A corporation shall not make any payment to purchase or redeem any redeemable shares issued by it if there are reasonable grounds for believing that,
(a) the corporation is or, after the payment, would be unable to pay its liabilities as they become due; or
(b) after the payment, the realizable value of the corporation’s assets would be less than the aggregate of,
(i) its liabilities, and
(ii) the amount that would be required to pay the holders of shares that have a right to be paid, on a redemption or in a liquidation, rateably with or before the holders of the shares to be purchased or redeemed, to the extent that the amount has not been included in its liabilities. R.S.O. 1990, c. B.16, s. 32 (2); 2006, c. 34, Sched. B, s. 9.
Donation of share
33. A corporation may accept from any shareholder a share of the corporation surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share except in accordance with section 34. R.S.O. 1990, c. B.16, s. 33.
Reduction of liability re unpaid share: stated capital
34. (1) Subject to subsection (4), a corporation may by special resolution,
(a) extinguish or reduce a liability in respect of an amount unpaid on any share; or
(b) reduce its stated capital for any purpose including, without limiting the generality of the foregoing, for the purpose of,
(i) distributing to the holders of issued shares of any class or series of shares an amount not exceeding the stated capital of the class or series, or
(ii) declaring its stated capital to be reduced by,
(A) an amount that is not represented by realizable assets, or
(B) an amount otherwise determined in respect of which no amount is to be distributed to holders of issued shares of the corporation. R.S.O. 1990, c. B.16, s. 34 (1).
Right to vote where reduction under subs. (1)
(2) Where a class or series of shares of a corporation would be affected by a reduction of stated capital under clause (1) (b) in a manner different from the manner in which any other class or series of shares of the corporation would be affected by such action, the holders of the differently affected class or series of shares are entitled to vote separately as a class or series, as the case may be, on the proposal to take the action, whether or not the shares otherwise carry the right to vote. R.S.O. 1990, c. B.16, s. 34 (2).
Account to be reduced specified
(3) A special resolution under this section shall specify the stated capital account or accounts from which the reduction of stated capital effected by the special resolution will be made. R.S.O. 1990, c. B.16, s. 34 (3).
Restriction on reduction
(4) A corporation shall not take any action to extinguish or reduce a liability in respect of an amount unpaid on a share or to reduce its stated capital for any purpose other than the purpose mentioned in sub-subclause (1)(b)(ii)(A) if there are reasonable grounds for believing that,
(a) the corporation is or, after the taking of such action, would be unable to pay its liabilities as they become due; or
(b) after the taking of such action, the realizable value of the corporation’s assets would be less than the aggregate of its liabilities. R.S.O. 1990, c. B.16, s. 34 (4).
Application for order where improper reduction
(5) A creditor of a corporation is entitled to apply to the court for an order compelling a shareholder or other recipient,
(a) to pay to the corporation an amount equal to any liability of the shareholder that was extinguished or reduced contrary to this section; or
(b) to pay or deliver to the corporation any money or property that was paid or distributed to the shareholder or other recipient as a consequence of a reduction of capital made contrary to this section. R.S.O. 1990, c. B.16, s. 34 (5).
(6) Repealed: 2002, c. 24, Sched. B, s. 25.
Class action
(7) Where it appears that there are numerous shareholders who may be liable under this section, the court may permit an action to be brought against one or more of them as representatives of the class and, if the plaintiff establishes a claim as creditor, may make an order of reference and add as parties in the referee’s office all such shareholders as may be found, and the referee shall determine the amount that each should contribute towards the plaintiff’s claim, which amount may not, in the case of any particular shareholder, exceed the amount referred to in subsection (5), and the referee may direct payment of the sums so determined. R.S.O. 1990, c. B.16, s. 34 (7).
Shareholder holding shares in fiduciary capacity
(8) No person holding shares in the capacity of a personal representative and registered on the records of the corporation as a shareholder and therein described as the personal representative of a named person is personally liable under this section, but the person named is subject to all liabilities imposed by this section. R.S.O. 1990, c. B.16, s. 34 (8).
s. 130 does not apply
(9) This section does not affect any liability that arises under section 130. R.S.O. 1990, c. B.16, s. 34 (9).
Amount deducted from account upon purchase, etc., of shares
35. (1) Upon a purchase, redemption or other acquisition by a corporation under section 30, 31, 32, 40 or 185 or clause 248 (3) (f) of shares or fractions thereof issued by it, the corporation shall deduct from the stated capital account maintained for the class or series of shares of which the shares purchased, redeemed or otherwise acquired form a part, an amount equal to the result obtained by multiplying the stated capital of the shares of that class or series by the number of shares of that class or series or fractions thereof purchased, redeemed or otherwise acquired, divided by the number of issued shares of that class or series immediately before the purchase, redemption or other acquisition. R.S.O. 1990, c. B.16, s. 35 (1).
Idem
(2) A corporation shall deduct the amount of a payment made by the corporation to a shareholder under clause 248 (3) (g) from the stated capital account maintained for the class or series of shares in respect of which the payment was made. R.S.O. 1990, c. B.16, s. 35 (2).
Adjustment in stated capital account
(3) A corporation shall adjust its stated capital account or accounts in accordance with any special resolution referred to in subsection 34 (3). R.S.O. 1990, c. B.16, s. 35 (3).
Idem
(4) Upon a change under section 168, 186 or 248 of issued shares of a corporation, or upon a conversion of such shares pursuant to their terms, into shares of another class or series, the corporation shall,
(a) deduct from the stated capital account maintained for the class or series of shares changed or converted an amount equal to the result obtained by multiplying the stated capital of the shares of that class or series by the number of shares of that class or series changed or converted, and dividing by the number of issued shares of that class or series immediately before the change or conversion; and
(b) add the result obtained under clause (a) and any additional consideration received pursuant to the change or conversion to the stated capital account maintained or to be maintained for the class or series of shares into which the shares have been changed or converted. R.S.O. 1990, c. B.16, s. 35 (4).
Idem
(5) For the purpose of subsection (4) and subject to its articles, where a corporation issues two classes or series of shares and there is attached to each class or series a right to convert a share of the one class or series into a share of the other class or series, the amount of stated capital attributable to a share in either class or series is the amount obtained when the sum of the stated capital of both classes or series of shares is divided by the number of issued shares of both classes or series of shares immediately before the conversion. R.S.O. 1990, c. B.16, s. 35 (5).
Status of shares purchased, etc.
(6) Shares of any class or series or fractional shares issued by a corporation and purchased, redeemed or otherwise acquired by it shall be cancelled or, if the articles limit the number of authorized shares of the class or series, may be restored to the status of authorized but unissued shares of the class. R.S.O. 1990, c. B.16, s. 35 (6).
Interpretation
(7) For the purposes of this section,
(a) a corporation holding shares in itself as permitted by subsections 29 (1) and (2) shall be deemed not to have purchased, redeemed or otherwise acquired the shares; and
(b) a corporation holding shares in itself under clause 29 (4) (a) shall be deemed not to have purchased, redeemed or otherwise acquired the shares at the time they were acquired, but,
(i) any of those shares that are held by the corporation at the expiration of two years, and
(ii) any shares into which any of those shares were converted by the corporation and held under clause 29 (4) (b) that are held by the corporation at the expiration of two years after the shares from which they were converted were acquired,
shall be deemed to have been acquired at the expiration of the two years. R.S.O. 1990, c. B.16, s. 35 (7).
Conversion of shares
(8) Where shares of a class or series are changed under section 168, 186 or 248, or converted pursuant to their terms, into the same or another number of shares of another class or series, such shares become the same in all respects as the shares of the class or series respectively into which they are changed or converted and, if the articles limit the number of shares of either of such classes or series, the number of authorized shares of such class or series is changed and the articles are amended accordingly. R.S.O. 1990, c. B.16, s. 35 (8).
Contract with corporation re purchase of its shares
36. (1) A contract with a corporation providing for the purchase of shares of the corporation by the corporation is specifically enforceable against the corporation except to the extent that the corporation cannot perform the contract without thereby being in breach of section 30, 31 or 32. R.S.O. 1990, c. B.16, s. 36 (1); 2006, c. 34, Sched. B, s. 10 (1).
Idem
(2) In any action brought on a contract referred to in subsection (1), the corporation has the burden of proving that performance thereof is prevented by section 30, 31 or 32. R.S.O. 1990, c. B.16, s. 36 (2); 2006, c. 34, Sched. B, s. 10 (2).
Enforcement of contract
(3) Until the corporation has fulfilled all of its obligations under a contract referred to in subsection (1), the other party to the contract retains the status of a claimant entitled to be paid as soon as the corporation is lawfully able to do so or, in a liquidation, to be ranked subordinate to the rights of creditors and to the rights of holders of any class of shares whose rights were in priority to the rights given to the holders of the class of shares being purchased, but in priority to the rights of other shareholders. 2006, c. 34, Sched. B, s. 10 (3).
Commission on sale of shares
37. The directors may authorize the corporation to pay a reasonable commission to any person in consideration of the person’s purchasing or agreeing to purchase shares of the corporation from the corporation or from any other person, or procuring or agreeing to procure purchasers for any such shares. R.S.O. 1990, c. B.16, s. 37.
Declaration of dividends
38. (1) Subject to its articles and any unanimous shareholder agreement, the directors may declare and a corporation may pay a dividend by issuing fully paid shares of the corporation or options or rights to acquire fully paid shares of the corporation and, subject to subsection (3), a corporation may pay a dividend in money or property. R.S.O. 1990, c. B.16, s. 38 (1).
Stock dividend
(2) If shares of a corporation are issued in payment of a dividend, the corporation may add all or part of the value of those shares to the stated capital account of the corporation maintained or to be maintained for the shares of the class or series issued in payment of the dividend. 2006, c. 34, Sched. B, s. 11.
When dividend not to be declared
(3) The directors shall not declare and the corporation shall not pay a dividend if there are reasonable grounds for believing that,
(a) the corporation is or, after the payment, would be unable to pay its liabilities as they become due; or
(b) the realizable value of the corporation’s assets would thereby be less than the aggregate of,
(i) its liabilities, and
(ii) its stated capital of all classes. R.S.O. 1990, c. B.16, s. 38 (3).
Corporations with wasting assets
39. (1) Despite anything in this Act, a corporation,
(a) that for the time being carries on as its principal business the business of operating a producing mining, gas or oil property owned and controlled by it;
(b) that has at least 75 per cent of its assets being of a wasting character; or
(c) that is incorporated for the purpose of acquiring the assets or a substantial part of the assets of a body corporate and administering such assets for the purpose of converting them into cash and distributing the cash among the shareholders of the corporation,
may declare and pay dividends out of the funds derived from the operations of the corporation. R.S.O. 1990, c. B.16, s. 39 (1).
Extent of impairment of capital
(2) The powers conferred by subsection (1) may be exercised even though the value of the net assets of the corporation may be thereby reduced to less than its stated capital of all classes if the payment of the dividends does not reduce the value of its remaining assets to an amount insufficient to meet all the liabilities of the corporation, exclusive of its stated capital of all classes. R.S.O. 1990, c. B.16, s. 39 (2).
Special resolution
(3) The powers conferred by subsection (1) may be exercised only under the authority of a special resolution. R.S.O. 1990, c. B.16, s. 39 (3).
Lien on share
40. (1) The articles or by-laws of a corporation or, in the case of a corporation other than an offering corporation, a unanimous shareholder agreement, may provide that the corporation has a lien on a share registered in the name of a shareholder or the shareholder’s legal representative for a debt of that shareholder to the corporation, including an amount unpaid in respect of a share issued by a body corporate on the date it was continued under this Act. 2006, c. 8, s. 107.
Exception
(2) Subsection (1) does not apply to any class or series of shares listed and posted for trading on a stock exchange in or outside Canada. 2006, c. 8, s. 107.
Enforcement of lien
(3) A corporation may enforce a lien referred to in subsection (1) in accordance with its articles, by-laws or unanimous shareholder agreement. 2006, c. 8, s. 107.
Shares personal property
41. The shares of a corporation are personal property. R.S.O. 1990, c. B.16, s. 41.
Restrictions on transfer, etc.
42. (1) An offering corporation shall not impose restrictions on the transfer or ownership of shares of any class or series except such restrictions as are authorized by its articles. R.S.O. 1990, c. B.16, s. 42 (1); 1994, c. 27, s. 71 (6); 2006, c. 8, s. 108 (1).
No public offer if transfer, etc., restricted — exceptions
(2) A corporation that has imposed restrictions on the transfer or ownership of a class or series of its shares shall not offer any of its shares of that class or series, or any shares convertible into shares of that class or series, to the public unless the restrictions are necessary,
(a) by or under any Act of Canada or Ontario as a condition to the obtaining, holding or renewal of authority to engage in any activity necessary to its undertaking;
(b) for the purpose of achieving or preserving its status as a Canadian body corporate for the purpose of any Act of Canada or Ontario;
(c) to limit to a specified level the ownership of its shares by any prescribed class of person for the purpose of assisting the corporation or any of its affiliates or associates to qualify under the Securities Act or similar legislation of a province or territory to obtain, hold or renew registration, or to qualify for membership in a stock exchange in Ontario recognized as such by the Commission; or
(d) to attain or to maintain a specified level of Canadian ownership or control for the purpose of assisting the corporation or any of its affiliates or associates to qualify to receive licences, permits, grants, payments or other benefits under any prescribed Act of Canada or a province or ordinance of a territory. R.S.O. 1990, c. B.16, s. 42 (2); 1994, c. 27, s. 71 (6); 2006, c. 8, s. 108 (2).
Application of subs. (2) (c, d)
(3) Nothing in clause (2) (c) or (d) authorizes a corporation to impose restrictions on the transfer or ownership of shares of any class or series of which any shares are outstanding unless,
(a) in the case of restrictions in respect of a class, the shares of the class; or
(b) in the case of restrictions in respect of a series, the shares of the series,
are already subject to restrictions for the purpose described in clause (2)(c) or (d). R.S.O. 1990, c. B.16, s. 42 (3); 1994, c. 27, s. 71 (6).
Idem
(4) A corporation may,
(a) limit the number of its shares that may be owned; or
(b) prohibit the ownership of its shares,
by any person whose ownership would adversely affect the ability of the corporation or any of its affiliates or associates to attain or maintain a level of Canadian ownership or control specified in its articles that equals or exceeds a specified level referred to in clause (2) (d). R.S.O. 1990, c. B.16, s. 42 (4).
Bearer debt obligations
43. Nothing in this Act prohibits the issue of debt obligations in bearer form. R.S.O. 1990, c. B.16, s. 43.
Irredeemable debt obligation
44. (1) A condition contained in a debt obligation or in an instrument for securing a debt obligation is not invalid by reason only that the debt obligation is thereby made irredeemable or redeemable only on the happening of a contingency, however remote, or on the expiration of a period, however long. R.S.O. 1990, c. B.16, s. 44 (1).
Debt obligations
(2) Debt obligations issued, pledged, hypothecated or deposited by a corporation are not redeemed by reason only that the indebtedness evidenced by the debt obligations or in respect of which the debt obligations are issued, pledged, hypothecated or deposited is repaid. R.S.O. 1990, c. B.16, s. 44 (2).
Idem
(3) Debt obligations issued by a corporation and purchased, redeemed or otherwise acquired by it may be cancelled or, subject to any applicable trust indenture or other agreement, may be reissued, pledged or hypothecated to secure any obligation of the corporation then existing or thereafter incurred, and any such acquisition and reissue, pledge or hypothecation is not a cancellation of the debt obligations. R.S.O. 1990, c. B.16, s. 44 (3).
 

Burlington Business Lawyer Christopher R. Neufeld is a corporate attorney admitted to practice law in both Ontario (Canada) and New York (U.S.A.).  Christopher's legal practice focuses primarily on business law, in particular corporate commercial transactions.  The law firm of Neufeld Legal Professional Corporation is headquartered at 719 Catalina Crescent, Burlington, Ontario L7L 5B9, and as such is in immediate proximity to downtown Toronto, Mississauga, Hamilton, Oakville, Brampton, Milton, Guelph and Kitchener Waterloo. Your leasing lawyer. COPYRIGHT 2009.

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