What Rights Do Shareholders Have?
May 14, 2024
The world of corporate law can be pretty complex. This is why understanding the rights and privileges afforded to shareholders is critical, not only for the investors themselves but for the companies in which they invest.
Matthew Harris, a Toronto-based lawyer and skilled litigator, is here to offer insight into the rights that shareholders hold within Canadian companies.
The Foundational Rights of Shareholders
Shareholders, the individuals or entities that own shares in corporations, possess certain rights that are essential to the investment's value and security. These rights vary depending on the type of shares held and the company's bylaws and articles of incorporation. Generally, they encompass:
Voting Rights: Shareholders have a say in significant corporate decisions during shareholder meetings.
Dividends: Shareholders are entitled to a portion of the company's profits as declared by the board of directors.
Information: Shareholders have access to pertinent company information, including financial statements.
Transferability: Shareholders have the right to sell or transfer shares according to the company's guidelines.
Right to Sue: Shareholders have the right to sue for wrongful acts committed against the company or in shareholder disputes.
Liquidation Rights: Shareholders are entitled to a proportionate share of assets upon the company's dissolution, after settling all debts.
Pre-emptive Rights: Shareholders have the right to purchase additional shares before the company offers them to the public to maintain their percentage of ownership.
Inspection Rights: Shareholders may have the right to inspect the company's books and records, providing transparency and accountability.
Right to Call Meetings: In some instances, shareholders have the power to call for special meetings to discuss urgent matters concerning the corporation's governance or strategy.
Shareholders’ Rights Specific to Toronto, Ontario
In Toronto, shareholders' rights are further defined and protected under both federal and provincial laws. The Ontario Business Corporations Act (OBCA) and the Canada Business Corporations Act (CBCA) provide a legal framework ensuring that shareholders are fairly treated and well-informed.
Specifically, they are entitled to attend, speak at, and vote at annual general meetings, have access to up-to-date and accurate corporate records, and have the right to dissent and appraisal in certain corporate restructuring transactions.
These laws lay the foundation for transparent, equitable treatment of shareholders, safeguarding their investments against unfair practices and mismanagement.
Matthew Harris has often talked about strong legal protections, and now, new laws have made things even better for shareholders. These laws highlight how important it is for companies to think about environmental, social, and governance (ESG) issues when making decisions.
Investors want to know more about how companies are dealing with sustainability and ethics, and now, Canadian companies must share more information about their ESG efforts so shareholders can understand better what the companies are doing and how this might affect their investments.
This move of giving shareholders more information is part of a bigger global change toward investing in ways that are good for the planet and people.
The Importance of Legal Guidance
If you’re a shareholder located in Toronto or anywhere in Ontario, you may require professional legal assistance to understand your rights. With a background in international education and extensive travel, Matthew Harris brings a broad perspective and deep understanding of the nuances of corporate law. He uses his knowledge and experience to protect his clients’ rights as shareholders and to defend their interests.
Matthew established his law firm with a clear mission: to offer strategic legal solutions tailored to his clients’ unique challenges. As a litigator, he focuses on safeguarding their professional interests while helping them achieve optimal resolutions to their legal issues.
Taking the Next Steps
Knowing your rights as a shareholder is the first step toward taking an active role in the management and success of your investments. It can empower you to make informed decisions, hold management accountable, and ensure your investment is performing to its full potential.
Shareholder rights in Canada are designed to protect and benefit both the shareholder and the corporation, fostering a healthy, transparent corporate culture. However, should disputes or misunderstandings arise, having a skilled lawyer like Matthew Harris by your side can make all the difference.
Your Go-To Corporate Lawyer in Toronto, Ontario
Investing in Canadian corporations has many advantages, but it does require a thorough understanding of your rights as a shareholder. Whether you're looking to exercise these rights or need help with a legal challenge, Matthew R. Harris Law P.C. stands ready to assist.
If you’re exploring investments or currently hold shares in Canadian enterprises, especially in Toronto, Hamilton, London, or Ottawa, consider this an invitation to connect with Matthew. He will help you chart a course that not only protects your current investments but also paves the way for future success.