Introduction
Share certificates are essential documents that represent ownership of shares in a corporation. While they have traditionally been issued as physical, paper documents with “wet ink” signatures, the landscape of corporate record-keeping is evolving. In Ontario, the requirement for wet ink share certificates has undergone changes. In this blog post, we’ll explore whether it is still required to have wet ink share certificates in Ontario and the implications for corporations. For legal guidance and assistance with corporate matters, please contact Falcon Law PC at 1-877-892-7778 or via email at info@falconlawyers.ca.
The Traditional Use of Wet Ink Share Certificates
Historically, the issuance of wet ink share certificates was a common practice in Ontario and many other jurisdictions. These physical certificates were printed on paper and signed by authorized individuals within the corporation, typically the corporate secretary or a director. Shareholders would hold these certificates as evidence of their ownership in the company.
Changes in Ontario Corporate Law
Ontario, like many jurisdictions, has adapted to technological advancements and the changing needs of corporations. As of December 31, 2018, amendments to the Ontario Business Corporations Act (OBCA) came into effect, allowing for electronic share certificates and reducing the requirement for wet ink certificates.
Key Points Regarding Share Certificates in Ontario
- Electronic Share Certificates: The OBCA now permits corporations to issue electronic share certificates in addition to, or in place of, physical (wet ink) certificates. These electronic certificates must meet specific legal requirements outlined in the OBCA.
- Share Register: Regardless of whether electronic or physical certificates are issued, corporations are required to maintain a share register. This register records details of share ownership, including the names and addresses of shareholders, the number of shares held, and the certificate numbers, if applicable.
- Shareholder Rights: Shareholders have the right to request physical certificates if electronic certificates are issued. The corporation must provide these upon request.
- Legally Binding: Both electronic and physical share certificates issued in compliance with the OBCA are legally binding and represent ownership of shares.
- Documentation and Compliance: It is essential for corporations to ensure that their electronic share certificates, if used, comply with the legal requirements outlined in the OBCA to maintain their validity.
Advantages of Electronic Share Certificates
The adoption of electronic share certificates can offer several advantages for corporations, including:
- Efficiency: Electronic certificates can be issued and transferred more quickly than physical certificates, streamlining corporate processes.
- Reduced Administrative Burden: The maintenance of electronic records is often more efficient and cost-effective than managing physical documents.
- Accessibility: Shareholders can access their electronic certificates from anywhere with an internet connection, increasing convenience.
- Environmental Impact: Reducing the use of paper for share certificates aligns with environmental sustainability goals.
Conclusion
While the use of wet ink share certificates remains a valid option in Ontario, the province has embraced the digital age by allowing the issuance of electronic share certificates. Corporations must ensure that their electronic certificates comply with the legal requirements outlined in the Ontario Business Corporations Act. Whether you choose to issue physical or electronic share certificates, maintaining a well-documented share register is essential for compliance and transparency.
For legal guidance on corporate matters, including the issuance of share certificates, please contact Falcon Law PC at 1-877-892-7778 or via email at info@falconlawyers.ca. Our team of experienced lawyers is here to assist you with your corporate needs and ensure compliance with Ontario corporate laws and regulations.
