Demystifying Par Value Shares: Tax Advisors Beware

Par value shares are often considered one of the last vestiges of the old Canadian corporate legislation. The current federal corporate legislation, and the majority of provincial corporate legislation, no longer permit the issuance of par value shares.

However, the corporate legislation in certain provinces (including British Columbia and Nova Scotia) still allow for the issuance of par value shares. It is not uncommon for companies in these jurisdictions to issue such shares. These companies, and their advisors, should have a general understanding of the rules applicable to par value shares, particularly as they relate to the paid‑up capital of those shares for tax purposes, since overlooking such rules may restrict planning opportunities or lead to unwanted tax implications.