Changes to Corporate Organizations
| Author | J. Anthony Vanduzer |
| Pages | 368-394 |
CHAPTER
10
CHANGES
TO
CORPORATE
ORGANIZATIONS
A.
CHANGES
IN
CORPORATE
CHARACTERISTICS
1)
Introduction
After
a
corporation
is
incorporated,
it may be
necessary
to
change
its
characteristics
for a
variety
of
reasons. Perhaps
a new
class
of
shares
must
be
created
to
meet
the
needs
of a new
investor,
or the
number
of
directors needs
to be
increased. Changing these characteristics involves
amending
the
articles
of the
corporation,
and in
this
chapter
we
discuss
how
this
may be
done. This chapter also sets
out
what
is
required
to
effect
various other corporate changes under
the
CBCA,
including
adjustments
to a
corporation's stated capital, continuing
the
corpora-
tion under
the
laws
of
another jurisdiction, amalgamating
the
corpora-
tion
with other corporations, selling substantially
all the
corporation's
assets,
and
terminating
the
corporation's existence.
2)
Amendment
of
Articles
The
articles
of the
corporation must
be
amended
to
add, change,
or
remove
any
provision contained
in the
articles
(CBCA,
ss.
173-79).l
Specifically,
amendment
is
required
to do any of the
following:
1
Each province with
a
statute based
on the
Canada
Business
Corporations
Act,
R.S.C.
1985,
c.
C-44
[CBCA],
has a
scheme
for
amending
articles. E.g.,
the
368
Changes
to
Corporate Organizations
369
•
change
the
corporate name;
•
change
the
province
of the
corporation's registered
office;
•
add, change,
or
remove provisions relating
to the
classes
of
shares
of
the
corporation;
•
add, change,
or
remove
any
restriction
on the
issue,
transfer,
or
own-
ership
of
shares;
•
change
the
number
or the
minimum
or
maximum number
of
direc-
tors;
•
add, change,
or
remove
any
restriction
on the
business
the
corpora-
tion
may
carry
on or on the
powers
the
corporation
may
exercise;
or
• add any
provision
that might have
been
set out in
articles
or
by-laws
at
the
time
of
incorporation
but was
not.
Subject
to the
exceptions
described
below, amendment
of the
arti-
cles requires approval
by
special resolution. This
is a
resolution passed
at
a
meeting
of
shareholders
by a
majority
of not
less than two-thirds
of
the
votes cast
at the
meeting
or
consented
to in
writing
by all
share-
holders.
A
level
of
approval higher than two-thirds
may be
specified
in
a
shareholders'
agreement
or in the
corporation's articles.
As
with
all
shareholder meetings, notice
of a
meeting
to
consider
a
resolution
to
amend
the
articles must
be
sent
to
shareholders.
The
notice must state
the
nature
of the
proposed amendment
in
sufficient
detail
to
permit
shareholders
to
form
a
reasoned decision about whether
to
vote
for or
against
the
amendment
and
must
include
the
text
of the
special
reso-
lution
on
which
the
shareholders will
be
asked
to
vote
(CBCA,
s.
135(6)).
In
addition,
if the
corporation
has
more than
fifty
sharehold-
ers,
the
management must send shareholders
a
form
of
proxy
and a
management
proxy circular that provide
further
information
(CBCA,
s.
149(1)).2
Shareholders
may
initiate
amendments
to
articles themselves
by
making
a
shareholder proposal
(CBCA,
s.
175(1)).
Proposals
and
the
proxy solicitation process were discussed
in
Chapter
7.
At
the
meeting, only those shareholders
who
would otherwise
be
entitled
to
vote
are
permitted
to do so. Any
class
or
series
of
shares that
is
affected
by the
amendment
in a
manner
set out in
section
176 of the
Ontario
Business
Corporations
Act,
R.S.O.
1990,
c.
B.16
[OBCA],
ss.
168-172,
273(3);
and the
Alberta
Business
Corporations
Act,
R.S.A.
2000,
c. B-9
[ABCA],
ss.
173-179. British Columbia's scheme
for
amending
the
memorandum
and
arti-
cles
of
association
is set out in the
Companies
Act,
R.S.C.
1996,
c. 62
[BCCA],
ss.
204,
217,
219
221,
223-226,
229-232.
Under
the
OBCA,
ibid.,
this obligation applies only
to
offering
corporations
(OBCA,
s.
11). Under
the
ABCA,
ibid.,
this obligation applies
to all
corporations
with more than
fifteen
shareholders
(s.
149).
2
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