The Impact Of Having 50 Shareholders

Companies approaching this threshold should be on the lookout for new obligations under both securities and corporate law

For many companies, bringing on new shareholders is an exciting occasion. Once a corporation accumulates a certain amount of stakeholders, however, new rules and requirements will apply.

All companies are subject to different prospectus exemptions and reporting obligations under Canadian securities laws upon accumulating 50 securityholders (including holders of shares, warrants, options, convertible notes, and other securities, but generally not including current or former employees of the issuer or its affiliates).

In addition, federally incorporated companies (including privately held companies) with more than 50 holders of voting shares must solicit proxies and prepare information circulars for each shareholder meeting.