The Role of Shareholders

While the first two articles in this series covered directors and officers, this one will cover those often referred to as “owners” who are the shareholders in a company. 

Under the Business Corporations Act, a shareholder is a party whose name appears in the securities register or central securities register of a company with respect to one or more shares. A shareholder can be an individual, a trust or another company. There are additional inclusions for parties with respect to pre-existing companies, continued companies and incorporators under the legislation as well but for the common understanding, we will focus on those individuals or entities who are listed on the central securities register. It is important to note that the party named on the shareholder register is the legal holder of shares, although the shares may be held on behalf of another party, the beneficial owner.  This arrangement with the beneficial owner must be reflected in the Transparency Register should the shareholder be classified as a significant individual under the legislation. For the purposes of the definition of a shareholder in the legislation, a beneficial holder would not be considered a shareholder.

In order to determine what rights and obligations a shareholder has, one would need to review the legislation, articles of the company, as well as case law and any applicable shareholders’ agreement.  The rights vested in a shareholder will often differ based on the type of shares that party holds.  For example, not all shares that are issued by a company must be voting and only those shares that carry voting rights are entitled to vote on decisions that do not statutorily require all shareholders involvement. Similarly, not all shareholders are entitled to receive dividends on their shares.  There can be many variations in the rights and restrictions associated with a class of shares. Hence, it is important to carefully review those documents or resources that may affect a particular shareholder when seeking to determine what rights a particular shareholder has.

A shareholder also has various protections through both statutory and common law claims which are intended to ensure shareholders are not oppressed or treated unfairly or prejudicially.  This does not necessarily mean all shareholders must be treated exactly the same, but the overarching principles are in place to help hold the directors accountable to shareholders in their decision making. Shareholders should also take steps to be involved in meetings and relevant information with respect to a company they hold shares in.

This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or any of our lawyers practicing in the area of corporate law at the following:

Jane Otterstrom: jane@touchstone.law

Una Kuzio: una@touchstone.law