Voiceless? Not Always: Voting Rights For Non-Voting Shareholders

When incorporating a corporation provincially under the Ontario Business Corporations Act ("OBCA") or federally under the Canada Business Corporations Act ("CBCA"), the corporation's articles must authorize at least one class of shares with voting rights. However, for various strategic or structural reasons, corporations may choose to create one or more classes of non-voting shares, meaning, shares that do not carry the right to vote at shareholder meetings. In exchange for relinquishing voting rights, holders of non-voting shares are often compensated with enhanced economic benefits, such as priority entitlement to dividends or preferential treatment upon liquidation.

Despite their designation, the OBCA and the CBCA grant non-voting shareholders limited voting rights in specific circumstances. This article outlines when such rights to vote apply.