Under the Ontario Business Corporations Act (“OBCA”), shareholders of a corporation have a variety of rights. Outlined below are a few rights that all shareholders should be aware they possess. Please click here to see part 2 of this post on shareholders’ remedies.
The board of directors, under s. 115 are ultimately responsible for managing or supervising the management of the business and affairs of a corporation. Major business decisions also involve the participation of the board of directors, though sales, leases, or exchanges of all or substantially all the property of the corporation that is not in the ordinary course of business requires the approval of shareholders (s. 184(3)). Shareholders also have voting rights that allow them to control the makeup of the board of directors (s. 119(4)), and also the ability to remove directors under s. 122(1) (though this is subject to exceptions under s. 120(f)). Shareholders have additional voting rights under s. 100(2).
Access to Information Rights
Under s. 140(1) corporations have the duty to maintain certain records, and s. 145(1) states that shareholders have the right to examine any of the records listed in s. 140(1) during business hours and take extracts of those records free of charge. Shareholders are also entitled to have notice of shareholders’ meetings (s. 96(1)).
Rights with Respect to Meetings
Under s. 94(1), 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” shall be called by the directors, and the directors can also call a special meeting at any time. Shareholders with “not less than 5 per cent of the issued shares” can “requisition the directors to call a meeting of shareholders” (s. 105(1)).
In the Event of Liquidation and Dissolution
By special resolution, the shareholders can require the corporation to be wound up voluntarily (s. 193(1)). Shareholders can also, through ordinary resolution passed at a meeting, remove an appointed liquidator and appoint a replacement (s. 196).
As a shareholder it is important to be aware of the numerous rights afforded to you under the OBCA. If the rights of a shareholder are breached, there are remedies available under the OBCA. Please see our blog post outlining some of these remedies.
If you require legal advice regarding these practice areas, please contact Gilbertson Davis LLP for an initial consultation.