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 are properly handled. In a sale, financing, estate transfer, or shareholder dispute, the records of ownership become critical. Whether shares are represented by certificates or not, the corporation needs a reliable securities register and a clear record of issuances, transfers, cancellations, and restrictions.
Our guide uses notices of uncertificated securities as it is way more convenient for record keeping purposes and unless you are borrowing money from a bank and the bank asks for a pledge of your shares, you will generally never need to switch to certificated shares. If your business has grown to that point, you will need an actual corporate lawyer to act for you and ensure you fully understand the risks of borrowing from a bank.
The information in this post is intended to be legal information only and nothing in it should be interpreted as legal advice.