Structuring Your Alberta Corporation’s Shares
Corporate share structure refers to the establishment of shares of one or more types and the issuance of some or all of those shares to shareholders. The types of shares created and issued is the corporate share structure for that company. While share structure can change, there are advantages to starting off the corporation with the right corporate share structure. Much confusion exists with the Business Corporations Act. The corporate start up lawyers at Kahane Law Office in Calgary, Alberta can help you make this important decision. We are only a call away. 403-225-8810.
Capital Share Structure
This aspect of corporate share structure involves the types of shares that a company creates and issues. It is possible for a corporation to have a corporate share structure that creates a variety of shares without issuing those shares. These different types of shares issued have the label of “classes of shares”. Shareholders can hold the same classes of shares as other shareholders. A single shareholder can own more than one class of shares within the corporate share structure. There are no limits to the number of different share classes a company issues.
What Are The Different Classes of Shares In Alberta?
Within corporate share structure there are two classes of shares. The first class of shares is a common share. The corporation may issue common shares as voting shares or non-voting shares. The second class of share is a preferred share. Picking the correct type of share for your situation is critical. Learn more about the differences between common shares and preferred shares here. The articles of incorporation of the company state the rights that each share holds. To further complicate things, a corporation may have several types of the above noted shares. These are usually referred as various letters. For example there can be a Class A, B and C voting share. We suggest adding more variety of shares than you anticipate. It does not cost any more if done when incorporated, and saves work and costs later on.
What Are Preferred Shares?
Simply put a corporate share structure that includes preferred shares allows for some share classes to have more rights than the other shares. These include the right to:
- Have the shares redeemed
- Receive dividends; and
- Convert the preferred shares into common shares in certain circumstances.
What Rights Exist For Different Corporate Share Structures
The articles of incorporation will dictate the specific rights of each class of share. Without restricting the classes of shares, the most basic rights will include the right to vote at shareholder meetings, the right to get a dividend if the corporation decides to declare one and the right to a share of any assets of the company if the corporation ceases to exist as a legal entity. The articles can have different rights assigned to different share classes. Restricting the rights of certain classes of shareholders is extremely important in some situations.
How Many Shares Should A Corporation Issue
The number of shares issued to form the corporate share structure will depend on the nature of the corporation and its shareholders. A corporation that has and will only ever have one shareholder may only issue on share. A corporation with many shareholders, or that will have many shareholders, will want a corporate share structure that has many more shares. This allows for easier distribution of shares to shareholders. It is a good idea to discuss the types and number of shares to be issued in your corporate share structure with your lawyer. We work with you to ensure the structure suits your current, and foreseeable future, needs.
Getting the Corporate Share Structure Help You Need in Calgary
It is very important to properly for your corporate share structure properly. Avoid tax, shareholder and liability by correctly setting up your corporation. The corporate lawyers at Kahane Law Office in Calgary, Alberta can help you start off on the right foot. Call today and book an appointment. An analysis of your share structure needs form part of every incorporation that we do. We pride ourselves on getting to know our clients and their needs. We can be reached at 403-225-8810 locally in Calgary, Alberta or you can reach us toll-free at 1-877-225-8817 or email us directly here.