Private Equity Sales (Private Corporation Shares)

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-11-01
CLNP Page ID:	2430
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Citation:	Private Equity Sales (Private Corporation Shares), CLNP 2430, <>, retrieved on 2024-11-01
Editor:	Sharvey
Last Updated:	2024/10/26

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Business Corporations Act, R.S.O. 1990, c. B.16

141 (1) A corporation shall prepare and maintain at its registered office, or at any other place in Ontario designated by the directors, a securities register in which it records the securities issued by it in registered form, showing with respect to each class or series of securities,

(a) the names, alphabetically arranged of persons who,

(i) are or have been within six years registered as shareholders of the corporation, the address including the street and number, if any, and an e-mail address if one is provided, of every such person while a holder, and the number and class of shares registered in the name of such holder,

(ii) are or have been within six years registered as holders of debt obligations of the corporation, the address including the street and number, if any, and an e-mail address if one is provided, of every such person while a holder, and the class or series and principal amount of the debt obligations registered in the name of such holder, or

(iii) are or have been within six years registered as holders of warrants of the corporation, other than warrants exercisable within one year from the date of issue, the address including the street and number, if any, and an e-mail address if one is provided, of every such person while a registered holder, and the class or series and number of warrants registered in the name of such holder; and

(b) the date and particulars of the issue of each security and warrant. R.S.O. 1990, c. B.16, s. 141 (1); 2017, c. 2, Sched. 12, s. 1 (10).

Register of transfers

(2) A corporation shall cause to be kept a register of transfers in which all transfers of securities issued by the corporation in registered form and the date and other particulars of each transfer shall be set out. R.S.O. 1990, c. B.16, s. 141 (2).

John Richard Southwell v. Carlgate Development Inc., Julie Anne Reis and Isabelle Margaret Southwell, 2024 ONSC 822 (CanLII)

[49] Indeed, the Ontario Court of Appeal has stated that the validity of a share transfer in the context of a corporate restructure is not dependent upon formal documentation. In Waxman v. Waxman (2004), 2004 CanLII 39040 (ON CA), 44 B.L.R. (3d) 165 (Ont. C.A.), a corporate restructure gave rise to the transfer of shares that was not compliant with an article of the corporation’s letters patent. The Ontario Court of Appeal affirmed the trial judge’s finding that this did not invalidate the transfer of the shares. The court held that the validity of the restructuring of a corporation does not depend on formal documentation, but on the consent of the shareholders, and that consent is a question of fact. In this case, the parties’ conduct convinces me that there was consent to transfer the shares to Mrs. Southwell and that they were properly transferred to Mrs. Southwell.

Trezzi v. Trezzi, 2019 ONCA 978 (CanLII)

[37] Finally, Gina claims that the application judge erred in his treatment of the statutory presumption created by s. 266(3) of the Business Corporations Act. Gina argued that an unexecuted [page673] "Shareholders' Register" listing her as a shareholder in ACC was presumptive proof of her share ownership pursuant to s. 266(3), which provides as follows:

266(3) An entry in a securities register of, or a security certificate issued by, a corporation is, in the absence of evidence to the contrary, proof that the person in whose name the security is registered or whose name appears on the certificate is the owner of the securities described in the register or in the certificate, as the case may be.

[38] The application judge rejected this argument. He found that the unexecuted "Shareholders' Register" did not qualify as a "securities register" for purposes of s. 266(3) because it did not meet the requirements for a "securities register" under s. 141(1) of the Business Corporations Act. Section 141(1) requires a corporation to prepare and maintain at its registered office, or at any place in Ontario designated by the directors, a "securities register in which it records the securities issued by it in registered form". The application judge found that Gina had not established that ACC had issued any securities in "registered form" under s. 141(1) because he concluded [at para. 44] that "the unexecuted share certificates in the minute book in the names of Gina and Peter are not securities issued in registered form". Rather, the application judge found that proving that securities had been issued in registered form would require "properly issued executed share certificates of ACC and evidence of the actual issuance of shares".

[39] In my view, given the application judge's factual finding that no shares had been issued by ACC in registered form, he did not err in concluding that the "Shareholders' Register" did not qualify as a "securities register" under s. 141(1), and consequently that the statutory presumption under s. 266(3) did not apply. While the statutory presumption might be relied upon to evince share ownership in the absence of an executed share certificate, in my view it must first be established that the document presented as a "securities register" is truly such. In this case, there was insufficient evidence that this document was a record of shares that had been issued in registered form. As a result, I conclude that the application judge's findings are owed substantial deference by this court.