Resolution of Shareholders

A Shareholders' Resolution is a written document that describes the actions taken by the shareholders of a corporation. The resolution highlights formal decisions made by shareholders and proves that the action taken by the shareholders on behalf of the corporation was approved.

Shareholders ultimately control the corporation through their ownership of shares with voting rights, and they have the power to vote for the election and dismissal of the board of directors, and the power to review and approve the corporation's financial statements, among other things.

What are the different types of Resolutions of Shareholders?

There are two types of resolutions:

• Ordinary Resolutions: this means the shareholders have voted on an issue where at least a majority (over 50%) of the votes were in favour. Changes that can be made with an ordinary resolution include amending by-laws;
• Special Resolutions: this means the shareholders have voted on an issue where two-thirds majority (67%) of the votes were in favour. Special resolutions are primarily needed for significant corporate changes. To see the changes that qualify as significant, applicable corporate law should be reviewed. For example, this document will allow shareholders to dissolve the corporation, which is considered a significant change.

Is it mandatory to have a resolution of shareholders?

Yes. Having a shareholders resolution is necessary in order to legalize any of the changes that shareholders have made. This means that without a resolution, the change won't legally take effect.

What are some of the changes that can be made in a shareholders resolution?

Some of those changes include:

• Change of Name of Corporation
• Acceptance of Resignation and Appointment of Director
• Acceptance of Resignation and Reduction in Number of Directors
• Appointment of new officers
• Give a business name to the corporation (also known as an operating name)
• Adoption of a new by-law: this means the shareholders approve new by-laws (rules that govern the corporation's affairs)
• Dissolution of the Corporation: this means terminating the corporation's existence

What must a resolution of shareholders contain?

A shareholders resolution must contain:

• The name of the corporation;
• The changes being made or the specific action to be taken;
• The approval by the shareholders and their signature; and
• The date of the change.

Who can enter into a resolution of shareholders?

Only the shareholders of the corporation may sign the resolutions. Neither a director nor an employee can sign the document unless they are also shareholders with the right to sign. Signing a resolution without the required legal authority voids the resolution.

What has to be done after a resolution of shareholders is ready?

This document should be filled out and signed by the shareholder(s) of the corporation to effect one or more of the above changes. The resolution may need to be delivered to the appropriate government authorities. For example, if the shareholder(s) are dissolving the corporation, a copy of the dissolution resolution will be delivered to Canada Revenue Agency (CRA). Once the document is filled out and signed, place it in the corporation's minute book (either print and put it in the physical binder or save a PDF to the electronic minute book).

Which laws are applicable to a resolution of shareholders?

Corporations are incorporated under federal or provincial laws, which dictates the rights and duties of a corporation's shareholders, as well as obligations regarding corporate records. Each statute is similar in nature. The following pieces of legislation govern corporate resolutions:

Ontario: Business Corporations Act, R.S.O. 1990, c. B.16

Manitoba: The Corporations Act, CCSM c C225

Alberta: Business Corporations Act, RSA 2000, c B-9

Saskatchewan: The Business Corporations Act, RSS 1978, c B-10

British Columbia: Business Corporations Act, SBC 2002, c 57

New Brunswick: Business Corporations Act, SNB 1981, c B-9.1

Nova Scotia: Companies Act, RSNS 1989, c 81

Prince Edward Island: Business Corporations Act, RSPEI 1988, c B-6.01

Quebec: Business Corporations Act, CQLR c S-31.1

Yukon: Business Corporations Act, RSY 2002, c 20

Northwest Territories: Business Corporations Act, SNWT 1996, c 19

Nunavut: Business Corporations Act, SNWT (Nu) 1996, c 19

Newfoundland and Labrador: Corporations Act, RSNL 1990, c C-36

Canada: Canada Business Corporations Act (R.S.C., 1985, c. C-44)

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Resolution of Shareholders - Template - Word & PDF

Country: Canada (English)

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