DIY Legal Blog - Tips & Tricks for Doing Simple Legal Tasks Yourself

Limited Liability Is Powerful, But Not Absolute
One of the main reasons to incorporate is limited liability. The Business Corporations Act (Ontario) (the “OBCA”) states that shareholders are not liable as shareholders for acts, defaults, obligations, or liabilities of the corporation except as provided in the OBCA. That principle separates the corporation’s legal obligations from the personal obligations of its shareholders. But limited liability should not be oversold. Shareholders may still be liable under contracts they personally guarantee, under tax or employment statutes, under oppression or other court remedies, or under a unanimous shareholder agreement that transfers... Read more...
Certificated and Uncertificated Securities
The Business Corporations Act (Ontario) (the “OBCA”) recognizes both certificated and uncertificated securities. It also links securities transfers to Ontario’s Securities Transfer Act, 2006, except where the OBCA provides otherwise. When securities are uncertificated, the corporation must provide required notices containing information that would otherwise appear on a certificate. For certificated securities, the OBCA sets content requirements, including information about rights, restrictions, and conditions. This matters because modern private corporations often move away from paper certificates. That can simplify administration, but only if the securities register is accurate and notices... Read more...
Share Transfer Restrictions: Keeping Control of the Cap Table
The Business Corporations Act (Ontario) (the “OBCA”) allows restrictions on the issue, transfer, or ownership of shares if those restrictions are properly authorized. It also permits a corporation to have a lien on shares in certain circumstances, unless the shares are exchange-traded. For corporations with restricted shares, the OBCA contains detailed rules for dealing with share ownership and sale issues tied to statutory restrictions. For private companies, transfer restrictions are often essential. They prevent a founder, investor, or family member from transferring shares to an outsider without approval. They also... Read more...
Buybacks, Redemptions, and Dividends: The OBCA’s Solvency Guardrails
The Business Corporations Act (Ontario) (the “OBCA”) permits a corporation to buy back or otherwise acquire its own shares, redeem redeemable shares, and pay dividends, but these powers are subject to solvency and capital-protection rules. The OBCA restricts purchases, redemptions, commissions, and dividends where the corporation cannot pay its liabilities as they become due or where the realizable value of assets would be insufficient under the statutory tests. This is a creditor-protection theme running through the OBCA. Shareholders may own the corporation economically, but corporate assets are not a free... Read more...
Issuing Shares: Consideration, Stated Capital, and Pre-Emptive Rights
The Business Corporations Act (Ontario) (the “OBCA”) gives directors the power to issue shares, but it also regulates how shares are paid for and recorded. Shares may be issued for money, property, or past services, and directors must determine that non-cash consideration has fair value. Issued shares are generally non-assessable, meaning shareholders are not later required to contribute more merely because they hold shares. The OBCA also deals with stated capital and provides that pre-emptive rights exist only if the articles or a unanimous shareholder agreement provide for them. For... Read more...
Share Classes: The DNA of Corporate Ownership
Share classes and their restrictions are featured heavily in the Business Corporations Act (Ontario) (the “OBCA”). If a corporation has only one class of shares, the OBCA provides default rights: the right to vote, the right to receive dividends when declared, and the right to receive remaining property on dissolution. If there is more than one class, the articles must set out the rights, privileges, restrictions, and conditions attached to each class. This is why share design is one of the most important incorporation decisions. Common shares, non-voting shares, preferred... Read more...
Registered Office, Corporate Seal, and Corporate Powers
Every Ontario corporation must have a registered office in Ontario. This address cannot be a P.O. Box. The Business Corporations Act (Ontario) (the "OBCA") also says a corporation is not required to have a corporate seal, and it gives corporations the capacity, rights, powers, and privileges of a natural person. The OBCA further provides that a corporation’s act is not invalid merely because it is contrary to its articles, by-laws, or unanimous shareholder agreement. The registered office is more than a mailing address. It is the statutory anchor for records,... Read more...
Choosing a Corporate Name: Branding Meets Statutory Compliance
The Business Corporations Act (Ontario) (the “OBCA”) permits an Ontario corporation to have a name or a number name, but a chosen name must meet statutory requirements. The OBCA prohibits names that contain prohibited words, names that are the same as or too similar to existing names, and names that are likely to deceive. Corporate names must include a corporate suffix, there are 6 options: Inc./Incorporated, Corp./Corporation, Ltd./Limited (or their French versions if a French name was used). A corporation may also use an English, French, combined, or equivalent-form name... Read more...
Ontario - Articles of Incorporation
In Ontario, creating a business corporation is achieved by filing articles of incorporation. The Business Corporations Act (Ontario) (the “OBCA”) allows one or more individuals or bodies corporate to incorporate, but it excludes certain people from acting as incorporators, including minors, people found incapable, and undischarged bankrupts. The articles are not just an administrative filing; they establish the corporation’s legal architecture, including its name or numbered name, share structure, restrictions on share transfers, number of directors, and any business restrictions. For founders, the practical point is simple: incorporation is not... Read more...