BURLINGTON BUSINESS LAWYER ontario business corporations act

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 VII

SHAREHOLDERS

Shareholders’ liability limited
92. (1) The shareholders of a corporation are not, as shareholders, liable for any act, default, obligation or liability of the corporation except under subsection 34 (5), subsection 108 (5) and section 243. R.S.O. 1990, c. B.16, s. 92 (1).
Shares subject to call
(2) The provisions of the Corporations Act relating to the liability of a holder of shares that are not fully paid and to the enforcement of such liability apply in respect of shares that were not fully paid,
(a) on the 1st day of January, 1971, in the case of shares of a corporation that then became subject to The Business Corporations Act, being chapter 53 of the Revised Statutes of Ontario, 1970; or
(b) on the day upon which any other body corporate was continued under The Business Corporations Act, being chapter 53 of the Revised Statutes of Ontario, 1970, or under this Act, in the case of shares of such other body corporate. R.S.O. 1990, c. B.16, s. 92 (2).
Place of meetings
93. (1) Subject to the articles and any unanimous shareholder agreement, a meeting of shareholders of a corporation shall be held at such place in or outside Ontario as the directors determine or, in the absence of such a determination, at the place where the registered office of the corporation is located. R.S.O. 1990, c. B.16, s. 93.
Meeting by electronic means
(2) A meeting held under subsection 94 (2) shall be deemed to be held at the place where the registered office of the corporation is located. 1999, c. 12, Sched. F, s. 4.
Shareholders’ meetings
94. (1) Subject to subsection 104 (1), the directors of a corporation,
(a) shall call an annual meeting of shareholders not later than eighteen months after the corporation comes into existence and subsequently not later than fifteen months after holding the last preceding annual meeting; and
(b) may at any time call a special meeting of shareholders. R.S.O. 1990, c. B.16, s. 94.
Meeting by electronic means
(2) Unless the articles or the by-laws provide otherwise, a meeting of the shareholders may be held by telephonic or electronic means and a shareholder who, through those means, votes at the meeting or establishes a communications link to the meeting shall be deemed for the purposes of this Act to be present at the meeting. 2001, c. 9, Sched. D, s. 2 (3).
Date for determining shareholders
95. (1) For the purpose of determining shareholders,
(a) entitled to receive payment of a dividend;
(b) entitled to participate in a liquidation or distribution; or
(c) for any other purpose except the right to receive notice of or to vote at a meeting,
the directors may fix in advance a date as the record date for such determination of shareholders, but the record date shall not precede by more than fifty days the particular action to be taken. R.S.O. 1990, c. B.16, s. 95 (1).
Same
(2) For the purpose of determining shareholders entitled to receive notice of a meeting of shareholders, the directors may fix in advance a date as the record date for such determination of shareholders, but the record date shall not precede by more than 60 days or by less than 30 days the date on which the meeting is to be held. 2006, c. 9, Sched. A, s. 1.
Idem
(3) Where no record date is fixed,
(a) the record date for the determination of shareholders entitled to receive notice of a meeting of shareholders shall be,
(i) at the close of business on the day immediately preceding the day on which the notice is given, or
(ii) if no notice is given, the day on which the meeting is held; and
(b) the record date for the determination of shareholders for any purpose other than to establish a shareholder’s right to receive notice of a meeting or to vote shall be at the close of business on the day on which the directors pass the resolution relating thereto. R.S.O. 1990, c. B.16, s. 95 (3).
Notice of date
(4) If a record date is fixed, unless notice of the record date is waived in writing by every holder of a share of the class or series affected whose name is set out in the securities register at the close of business on the day the directors fix the record date, notice thereof shall be given, not less than seven days before the date so fixed,
(a) by advertisement in a newspaper published or distributed in the place where the corporation has its registered office and in each place in Canada where it has a transfer agent or where a transfer of its shares may be recorded; and
(b) by written notice to each stock exchange in Canada on which the shares of the corporation are listed for trading. R.S.O. 1990, c. B.16, s. 95 (4).
Notice of shareholders’ meetings
96. (1) Notice of the time and place of a meeting of shareholders shall be sent, in the case of an offering corporation, not less than twenty-one days and, in the case of any other corporation, not less than ten days, but, in either case, not more than fifty days, before the meeting,
(a) to each shareholder entitled to vote at the meeting;
(b) to each director; and
(c) to the auditor of the corporation. R.S.O. 1990, c. B.16, s. 96 (1).
Idem
(2) A notice of a meeting is not required to be sent to shareholders who were not registered on the records of the corporation or its transfer agent on the record date determined under subsection 95 (2) or (3), but failure to receive a notice does not deprive a shareholder of the right to vote at the meeting. R.S.O. 1990, c. B.16, s. 96 (2).
Idem
(3) If a meeting of shareholders is adjourned for less than thirty days, it is not necessary, unless the by-laws otherwise provide, to give notice of the adjourned meeting other than by announcement at the earliest meeting that is adjourned. R.S.O. 1990, c. B.16, s. 96 (3).
Idem
(4) If a meeting of shareholders is adjourned by one or more adjournments for an aggregate of thirty days or more, notice of the adjourned meeting shall be given as for an original meeting but, unless the meeting is adjourned by one or more adjournments for an aggregate of more than ninety days, section 111 does not apply. R.S.O. 1990, c. B.16, s. 96 (4).
Special business
(5) All business transacted at a special meeting of shareholders and all business transacted at an annual meeting of shareholders, except consideration of the minutes of an earlier meeting, the financial statements and auditor’s report, election of directors and reappointment of the incumbent auditor, shall be deemed to be special business. R.S.O. 1990, c. B.16, s. 96 (5).
Idem
(6) Notice of a meeting of shareholders at which special business is to be transacted shall state or be accompanied by a statement of,
(a) the nature of that business in sufficient detail to permit the shareholder to form a reasoned judgment thereon; and
(b) the text of any special resolution or by-law to be submitted to the meeting. R.S.O. 1990, c. B.16, s. 96 (6).
Shareholders’ meeting
97. Subject to this Act or the articles or by-laws of a corporation or a unanimous shareholder agreement,
(a) all questions proposed for the consideration of the shareholders shall be determined by the majority of the votes cast and the chair presiding at the meeting shall not have a second or casting vote in case of an equality of votes;
(b) the chair presiding at a meeting of shareholders may, with the consent of the meeting and subject to such conditions as the meeting decides, adjourn the meeting from time to time and from place to place subject to subsections 96 (3) and (4); and
(c) the president or, in his or her absence, a vice-president who is a director shall preside as chair at a meeting of shareholders, but, if there is no president or such a vice-president or if at a meeting none of them is present within fifteen minutes after the time appointed for the holding of the meeting, the shareholders present shall choose a person from their number to be the chair. R.S.O. 1990, c. B.16, s. 97.
Waiving notice
98. A shareholder and any other person entitled to attend a meeting of shareholders may in any manner and at any time waive notice of a meeting of shareholders, and attendance of any such person at a meeting of shareholders is a waiver of notice of the meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called. R.S.O. 1990, c. B.16, s. 98.
Proposal
99. (1) A registered holder of shares entitled to vote or a beneficial owner of shares that are entitled to be voted at a meeting of shareholders may,
(a) submit to the corporation notice of a proposal; and
(b) discuss at the meeting any matter in respect of which the registered holder or beneficial owner would have been entitled to submit a proposal. 2006, c. 34, Sched. B, s. 14 (1).
Circulating proposal
(2) Where a corporation receives notice of a proposal and the corporation solicits proxies, it shall set out the proposal in the management information circular required by section 112 or attach the proposal thereto. R.S.O. 1990, c. B.16, s. 99 (2).
Statement in support of proposal
(3) If so requested by the person who submits notice of a proposal, the corporation shall include in the management information circular or attach to it a statement in support of the proposal by the person and the name and address of the person. 2006, c. 34, Sched. B, s. 14 (2).
Same
(3.1) The proposal referred to in subsection (2) and the statement referred to in subsection (3) shall together not exceed the prescribed maximum number of words. 2006, c. 34, Sched. B, s. 14 (2).
Proposal may include nominations
(4) A proposal may include nominations for the election of directors if the proposal is signed by one or more holders of shares representing in the aggregate not less than 5 per cent of the shares or 5 per cent of the shares of a class or series of shares of the corporation entitled to vote at the meeting to which the proposal is to be presented, but this subsection does not preclude nominations being made at a meeting of shareholders. R.S.O. 1990, c. B.16, s. 99 (4).
Where subss. (2), (3) do not apply
(5) A corporation is not required to comply with subsections (2) and (3) where,
(a) the proposal is not submitted to the corporation at least sixty days before the anniversary date of the last annual meeting, if the matter is proposed to be raised at an annual meeting, or at least sixty days before a meeting other than the annual meeting, if the matter is proposed to be raised at a meeting other than the annual meeting;
(b) it clearly appears that the primary purpose of the proposal is to enforce a personal claim or redress a personal grievance against the corporation or its directors, officers or security holders;
(b.1) it clearly appears that the proposal does not relate in a significant way to the business or affairs of the corporation;
(c) not more than two years before the receipt of the proposal, a person failed to present, in person or by proxy, at a meeting of shareholders, a proposal that, at the person’s request, had been included in a management information circular relating to the meeting; or
(d) substantially the same proposal was submitted to shareholders in a management information circular or a dissident’s information circular relating to a meeting of shareholders held within two years preceding the receipt of the shareholder’s request and the proposal was defeated. R.S.O. 1990, c. B.16, s. 99 (5); 2006, c. 34, Sched. B, s. 14 (3).
Where no liability
(6) No corporation or person acting on its behalf incurs any liability by reason only of circulating a proposal or statement in compliance with this section. R.S.O. 1990, c. B.16, s. 99 (6).
Notice of refusal
(7) If a corporation refuses to include a proposal in a management information circular, the corporation shall, within 10 days after receiving the proposal, send notice to the person submitting the proposal of its intention to omit the proposal from the management information circular and send to the person a statement of the reasons for the refusal. 2006, c. 34, Sched. B, s. 14 (4).
Application to court
(8) On the application of a person submitting a proposal who claims to be aggrieved by a corporation’s refusal under subsection (7), a court may restrain the holding of the meeting to which the proposal is sought to be presented and make any further order it thinks fit. 2006, c. 34, Sched. B, s. 14 (4).
Idem
(9) The corporation or any person aggrieved by a proposal may apply to the court for an order permitting the corporation to omit the proposal from the management information circular, and the court, if it is satisfied that subsection (5) applies, may make such order as it thinks fit. R.S.O. 1990, c. B.16, s. 99 (9).
Idem
(10) An applicant under subsection (8) or (9) shall give the Director notice of the application and the Director is entitled to appear and be heard in person or by counsel. R.S.O. 1990, c. B.16, s. 99 (10).
Definition
(11) In this section,
“proposal” means a matter that a registered holder or beneficial owner of shares entitled to be voted proposes to raise at a meeting of shareholders. 2006, c. 34, Sched. B, s. 14 (5).
List of shareholders
100. (1) A corporation shall prepare a list of shareholders entitled to receive notice of a meeting, arranged in alphabetical order and showing the number of shares held by each shareholder, which list shall be prepared,
(a) if a record date is fixed under subsection 95 (2), not later than ten days after such record date; or
(b) if no record date is fixed,
(i) at the close of business on the day immediately preceding the day on which notice is given, or
(ii) where no notice is given, on the day on which the meeting is held. R.S.O. 1990, c. B.16, s. 100 (1).
Entitlement to vote
(2) A shareholder whose name appears on a list prepared under subsection (1) is entitled to vote the shares shown opposite the shareholder’s name at the meeting to which the list relates. 2006, c. 34, Sched. B, s. 15.
(3) Repealed: 2006, c. 34, Sched. B, s. 15.
Examination of list
(4) A shareholder may examine the list of shareholders,
(a) during usual business hours at the registered office of the corporation or at the place where its central securities register is maintained; and
(b) at the meeting of shareholders for which the list was prepared. R.S.O. 1990, c. B.16, s. 100 (4).
Quorum
101. (1) Unless the by-laws otherwise provide, the holders of a majority of the shares entitled to vote at a meeting of shareholders, whether present in person or represented by proxy, constitute a quorum. R.S.O. 1990, c. B.16, s. 101 (1).
Idem
(2) If a quorum is present at the opening of a meeting of shareholders, the shareholders present may, unless the by-laws otherwise provide, proceed with the business of the meeting even if a quorum is not present throughout the meeting. R.S.O. 1990, c. B.16, s. 101 (2).
Idem
(3) If a quorum is not present at the time appointed for a meeting of shareholders, or within such reasonable time thereafter as the shareholders present may determine, the shareholders present may adjourn the meeting to a fixed time and place but may not transact any other business. R.S.O. 1990, c. B.16, s. 101 (3).
Where only one shareholder
(4) If a corporation has only one shareholder, or only one holder of any class or series of shares, the shareholder present in person or by proxy constitutes a meeting. R.S.O. 1990, c. B.16, s. 101 (4).
Voting rights
102. (1) Unless the articles otherwise provide, each share of a corporation entitles the holder thereof to one vote at a meeting of shareholders. R.S.O. 1990, c. B.16, s. 102 (1).
Representative
(2) Where a body corporate or association is a shareholder of a corporation, the corporation shall recognize any individual authorized by a resolution of the directors or governing body of the body corporate or association to represent it at meetings of shareholders of the corporation. R.S.O. 1990, c. B.16, s. 102 (2).
Idem
(3) An individual authorized as set out in subsection (2) may exercise on behalf of the body corporate or association he or she represents all the powers it could exercise if it were an individual shareholder. R.S.O. 1990, c. B.16, s. 102 (3).
Joint shareholders
(4) Unless the by-laws otherwise provide, where two or more persons hold shares jointly, one of those holders present at a meeting of shareholders may in the absence of the others vote the shares, but if two or more of those persons are present, in person or by proxy, they shall vote as one on the shares jointly held by them. R.S.O. 1990, c. B.16, s. 102 (4).
Manner of voting
103. (1) Unless the by-laws otherwise provide, voting at a meeting of shareholders shall be by show of hands, except where a ballot is demanded by a shareholder or proxyholder entitled to vote at the meeting. R.S.O. 1990, c. B.16, s. 103 (1).
Idem
(2) A shareholder or proxyholder may demand a ballot either before or after any vote by show of hands. R.S.O. 1990, c. B.16, s. 103 (2).
Entry in minutes
(3) Unless a ballot is demanded, an entry in the minutes of a meeting of shareholders to the effect that the chair declared a motion to be carried is admissible in evidence as proof of the fact, in the absence of evidence to the contrary, without proof of the number or proportion of the votes recorded in favour of or against the motion. R.S.O. 1990, c. B.16, s. 103 (3).
Resolution in lieu of meeting
104. (1) Except where a written statement is submitted by a director under subsection 123 (2) or where representations in writing are submitted by an auditor under subsection 149 (6),
(a) a resolution in writing signed by all the shareholders or their attorney authorized in writing entitled to vote on that resolution at a meeting of shareholders is as valid as if it had been passed at a meeting of the shareholders; and
(b) a resolution in writing dealing with all matters required by this Act to be dealt with at a meeting of shareholders, and signed by all the shareholders or their attorney authorized in writing entitled to vote at that meeting, satisfies all the requirements of this Act relating to that meeting of shareholders. R.S.O. 1990, c. B.16, s. 104 (1); 2000, c. 26, Sched. B, s. 3 (5, 6).
Copy of resolution kept with minutes
(2) A copy of every resolution referred to in subsection (1) shall be kept with the minutes of the meetings of shareholders. R.S.O. 1990, c. B.16, s. 104 (2).
Requisition for shareholders meeting
105. (1) The holders of not less than 5 per cent of the issued shares of a corporation that carry the right to vote at a meeting sought to be held may requisition the directors to call a meeting of shareholders for the purposes stated in the requisition. R.S.O. 1990, c. B.16, s. 105 (1).
Idem
(2) The requisition referred to in subsection (1) shall state the business to be transacted at the meeting and shall be sent to the registered office of the corporation. R.S.O. 1990, c. B.16, s. 105 (2).
Duty of directors to call meeting
(3) Upon receiving the requisition referred to in subsection (1), the directors shall call a meeting of shareholders to transact the business stated in the requisition unless,
(a) a record date has been fixed under subsection 95 (2) and notice thereof has been given under subsection 95 (4);
(b) the directors have called a meeting of shareholders and have given notice thereof under section 96; or
(c) the business of the meeting as stated in the requisition includes matters described in clauses 99 (5) (b) to (d). R.S.O. 1990, c. B.16, s. 105 (3).
Where requisitionist may call meeting
(4) Subject to subsection (3), if the directors do not within twenty-one days after receiving the requisition referred to in subsection (1) call a meeting, any shareholder who signed the requisition may call the meeting. R.S.O. 1990, c. B.16, s. 105 (4).
Calling of meeting
(5) A meeting called under this section shall be called as nearly as possible in the manner in which meetings are to be called under the by-laws, this Part and Part VIII. R.S.O. 1990, c. B.16, s. 105 (5).
Repayment of expenses
(6) The corporation shall reimburse the shareholders for the expenses reasonably incurred by them in requisitioning, calling and holding the meeting unless the shareholders have not acted in good faith and in the interest of the shareholders of the corporation generally. R.S.O. 1990, c. B.16, s. 105 (6).
Requisition by court
106. (1) If for any reason it is impracticable to call a meeting of shareholders of a corporation in the manner in which meetings of those shareholders may be called or to conduct the meeting in the manner prescribed by the by-laws, the articles and this Act, or if for any other reason the court thinks fit, the court, upon the application of a director or a shareholder entitled to vote at the meeting, may order a meeting to be called, held and conducted in such manner as the court directs and upon such terms as to security for the costs of holding the meeting or otherwise as the court deems fit. R.S.O. 1990, c. B.16, s. 106 (1).
Power of court
(2) Without restricting the generality of subsection (1), the court may order that the quorum required by the by-laws, the articles or this Act be varied or dispensed with at a meeting called, held and conducted under this section. R.S.O. 1990, c. B.16, s. 106 (2).
Effect of meeting
(3) A meeting called, held and conducted under this section is for all purposes a meeting of shareholders of the corporation duly called, held and conducted. R.S.O. 1990, c. B.16, s. 106 (3).
Determination of controversy
107. (1) A corporation, shareholder or director may apply to the court to determine any controversy with respect to an election or appointment of a director or auditor of the corporation. R.S.O. 1990, c. B.16, s. 107 (1).
Court order
(2) Upon an application under this section, the court may make any order it thinks fit including, without limiting the generality of the foregoing,
(a) an order restraining a director or auditor whose election or appointment is challenged from acting pending determination of the dispute;
(b) an order declaring the result of the disputed election or appointment;
(c) an order requiring a new election or appointment and including in the order directions for the management of the business and affairs of the corporation until a new election is held or appointment made; and
(d) an order determining the voting rights of shareholders and of persons claiming to own shares. R.S.O. 1990, c. B.16, s. 107 (2).
Agreement between shareholders
108. (1) A written agreement between two or more shareholders may provide that in exercising voting rights the shares held by them shall be voted as therein provided. R.S.O. 1990, c. B.16, s. 108 (1).
Idem
(2) A written agreement among all the shareholders of a corporation or among all the shareholders and one or more persons who are not shareholders may restrict in whole or in part the powers of the directors to manage or supervise the management of the business and affairs of the corporation. R.S.O. 1990, c. B.16, s. 108 (2).
Unanimous shareholder agreement
(3) Where a person who is the registered holder of all the issued shares of a corporation makes a written declaration that restricts in whole or in part the powers of the directors to manage or supervise the management of the business and affairs of a corporation, the declaration shall be deemed to be a unanimous shareholder agreement. R.S.O. 1990, c. B.16, s. 108 (3); 2006, c. 34, Sched. B, s. 16 (1).
Party to unanimous shareholder agreement
(4) A transferee of shares subject to a unanimous shareholder agreement shall be deemed to be a party to the agreement. R.S.O. 1990, c. B.16, s. 108 (4); 2006, c. 8, s. 119 (1).
Where shareholder has power, etc., of director
(5) A shareholder who is a party to a unanimous shareholder agreement has all the rights, powers, duties and liabilities of a director of a corporation, whether arising under this Act or otherwise, including any defences available to the directors, to which the agreement relates to the extent that the agreement restricts the discretion or powers of the directors to manage or supervise the management of the business and affairs of the corporation and the directors are relieved of their duties and liabilities, including any liabilities under section 131, to the same extent. 2006, c. 34, Sched. B, s. 16 (2).
Unanimous shareholder agreement
(5.1) Nothing in this section prevents shareholders from fettering their discretion when exercising the powers of directors under a unanimous shareholder agreement. 2006, c. 34, Sched. B, s. 16 (2).
Matter that a unanimous shareholder agreement may provide
(6) A unanimous shareholder agreement may, without restricting the generality of subsection (2), provide that,
(a) any amendment of the unanimous shareholder agreement may be effected in the manner specified therein; and
(b) in the event that shareholders who are parties to the unanimous shareholder agreement are unable to agree on or resolve any matter pertaining to the agreement, the matter may be referred to arbitration under such procedures and conditions as are specified in the unanimous shareholder agreement. R.S.O. 1990, c. B.16, s. 108 (6).
Issuance or shares subject to unanimous shareholder agreement
(7) If a unanimous shareholder agreement is in effect at the time a share is issued by a corporation to a person other than an existing shareholder,
(a) that person shall be deemed to be a party to the agreement whether or not that person had actual knowledge of it when the share was issued;
(b) the issue of the share does not operate to terminate the agreement; and
(c) if that person is a purchaser for value without notice of the agreement, that person may rescind the contract under which the shares were acquired by giving notice to that effect to the corporation within 60 days after the person actually receives a complete copy of the agreement. 2006, c. 8, s. 119 (2).
Transfer of shares subject to unanimous shareholder agreement
(8) If a unanimous shareholder agreement is in effect when a person who was not otherwise a party to the agreement acquires a share of the corporation, other than under subsection (1),
(a) the person who acquired the share shall be deemed to be a party to the agreement whether or not that person had actual knowledge of it when he or she acquired the share; and
(b) neither the acquisition of the share nor the registration of that person as a shareholder operates to terminate the agreement. 2006, c. 8, s. 119 (2).
Notice of objection
(9) If a person referred to in subsection (8) is a purchaser for value without notice of the unanimous shareholder agreement and the transferor’s share certificate, if any, did not contain a reference to the unanimous shareholder agreement, the transferee may, within 60 days after he or she actually receives a complete copy of the agreement, send to the corporation and the transferor a notice of objection. 2006, c. 8, s. 119 (2).
Rights of transferee
(10) If a person sends a notice of objection under subsection (9), that person is entitled to,
(a) rescind the contract under which the shares were acquired by giving notice to that effect to the corporation and the transferor within 60 days after the transferee actually receives a complete copy of the unanimous shareholder agreement; or
(b) demand that the transferor pay the transferee the fair value of the shares held by the transferee, determined as of the close of business on the day on which the transferor delivers the notice of objection to the corporation, in which case subsections 185 (4), (18) and (19) apply, with the necessary modifications, as if the transferor were the corporation. 2006, c. 8, s. 119 (2).
Deficiency
(11) A transferee who is entitled to be paid the fair value of the transferee’s shares under clause (10) (b) also has the right to recover from the transferor the amount by which the value of the consideration paid for those shares exceeds their fair value. 2006, c. 8, s. 119 (2).

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. COPYRIGHT 2009.

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