Learn about the concept of shareholders and how they relate to your corporation.
A corporation is owned by its shareholders. The number of shares owned by each shareholder reflects the proportion of the corporation they own. When you form a new corporation with Goodlawyer, you choose your corporation’s shareholders, allocate ownership interests among, and assign voting or non-voting rights to each shareholder.
1. Allocating Ownership
If your corporation has only one shareholder, Goodlawyer issues that shareholder a total of 10,000 shares (0.01% stake per share), with each share having a nominal price of $0.01 ($100 total for 10,000 shares). That’s because when a company is first incorporated, Canadian law requires the shareholders to actually buy the shares they are issued. Learn more about paying for your initial share subscription here.
If you have multiple shareholders, Goodlawyer allows you to allocate their ownership by entering a percent (%) ownership, and we will automatically calculate their number of shares and dollars owed to the corporation.
2. Common Shares
Common shares are the most common form of ownership interest for most businesses, and that’s why they’re standard for all Goodlawyer Incorporations. They are created under your corporation's articles of incorporation and typically give their holders certain rights, like voting rights, the right to dividends, and the right to a distribution of the corporation's assets on a liquidation or dissolution.
Common shares do not have any special priority or “preferred rights” over your corporation’s assets. So when you decide to wind down your corporation, the holders of common shares will be paid out in a manner that reflects the number of common shares they own. The holders of your voting common shares and non-voting common shares will be treated equally with respect to the distribution of your corporation’s assets on dissolution.
3. Voting and Non-Voting Shares
With a Goodlawyer Incorporation, your corporation is authorized to issue an unlimited number of voting common shares and an unlimited number of non-voting common shares. This way you don’t have to spend time customizing the rights and privileges of the shares given to each of your initial shareholders.
Your voting common shares are suitable for issuance to those shareholders who have the right to actively participate in your corporation’s decision-making process (like the founders, directors, senior managers, etc.).
Your non-voting common shares are suitable for passive shareholders who wish to benefit from your corporation’s long-term growth, but aren’t involved in making key management decisions for the business.
With a Goodlawyer Incorporation, each voting common share is entitled to one vote at a shareholders’ meeting. So the holder of a majority of voting common shares has the decisive vote on any matter put to the shareholders for a vote.
There are certain matters where even the non-voting shareholders get to vote, but these instances are rare and prescribed under corporate law statutes. Talk to a Good Lawyer for more information.
4. Customizing Shares
We designed a standardized share structure for all Goodlawyer Incorporations, so you don’t have to spend time customizing the rights and privileges of the shares given to each of your initial shareholders.
Standardization isn’t for everyone, of course. Perhaps your founding team agreed to pay a larger sum for their initial ownership interests to capitalize the business and you need to issue more shares or issue shares at a higher initial value. Or, perhaps you wish to create additional share classes beyond voting common shares and non-voting common shares, in order to further differentiate the rights, privileges and priorities of your shareholders.
If you wish to customize your initial share structure or initial share issuances, please book a Lawyer Assisted Incorporation with a Good Lawyer over the platform.