Corporate shares are extremely flexible tools if used correctly. A properly planned corporate share structure helps our clients take advantage of shares for their everyday business needs. From employee compensation structures to third-party investments, the right share structure can help accelerate your business forward.
Offering proactive advice, Hansra Law provides tailored solutions to structure corporate shares for our clients. The right type of share structure will depend on the our client’s specific goals and circumstances, which is why we always get to know our clients well by having dedicated client teams and long-standing relationships. Our experience and versatility guarantees clients a first-class service that embraces both technical quality and commercial awareness.
Types of Shares
Most newly incorporated provincial or federal corporations in Canada generally make use of three types of shares:
- Common Shares – these are generally voting shares and determine who controls corporate decision making, such as voting the directors into office or deciding whether to sell the business.
- Preference Shares – these shares are typically non-voting shares that are used to seek investments and finance the growth of the company without taking on formal debt.
- Special Shares – these are a hybrid of Common and Preference shares and can be created to manage whatever needs or priorities of importance.
Share rights can be attached to any of the above mentioned shares to create unique variations of any type of share. The creativity in structuring a technology company versus an employee compensation scheme comes with the differences that can be set up with the following shareholder rights:
- Voting vs. Non-Voting: determines whether the shareholder will receive voting rights on key corporate decisions.
- Assets on Dissolution: the rights to the assets of the company once the company is wound up or dissolved.
- Redemption: a shareholder’s right that requires the company to buy back a shareholder’s shares at a time of the shareholder’s choosing.
- Retraction: similar to the redemption right, a right allowing the company to require a shareholder to sell shares back to the company at a time of the company’s choosing.
- Dividends: a shareholder’s entitlement to dividends declared by the company, including whether a class of shares has priority to dividend payments over other classes.