A share issuance resolution records the corporation’s decision to issue new shares and the terms of that issue. It should say which class is issued, to whom, for what consideration and when the person becomes the registered holder.
The resolution is only one part of the record. Keep the subscription or purchase agreement, proof of payment, certificate or acknowledgement and updated securities register together so the ownership story is complete.
- Approved by
- The directors, subject to the articles and any reserved shareholder approval
- Signed by
- Every director entitled to vote, if passed in writing
- Consideration
- Cash, property, services or another permitted form, documented clearly
- Filed with the government
- Usually no for the issue itself; check beneficial-ownership and annual-report requirements
- Keep with it
- Subscription agreement, proof of consideration, certificate and securities register entry
When you need one
- Issuing founder shares when the corporation is organized.
- Bringing in an investor or issuing shares to an employee, family member or trust.
- Issuing a new class or series that the articles already authorize.
- Converting a shareholder loan or other obligation into shares after getting tax advice.
- Issuing shares as consideration for property, services or a business acquisition.
- For a change to an existing holder’s ownership, see the share transfer resolution.
Who approves it
Directors usually decide when and to whom authorized shares are issued, subject to the articles, pre-emptive rights, shareholder agreements and any special approval required for the transaction. The corporation should not issue a class or number of shares its constitutional documents do not permit.
| Jurisdiction | Rule |
|---|---|
| Canada, federal (CBCA) | The directors issue shares at the times, to the persons and for the consideration they determine, subject to the articles and any pre-emptive rights. The corporation must record the issue in its securities register. |
| Ontario (OBCA) | Shares may be issued at the times, to the persons and for the consideration the directors determine, subject to the articles, bylaws, unanimous shareholder agreement and pre-emptive rights. |
| British Columbia (BCBCA) | Directors may issue shares subject to the memorandum and articles. The central securities register records the class, holder, number, date and particulars of each issue. |
| Alberta (ABCA) | The directors issue shares subject to the articles and any pre-emptive rights. The issue and consideration should be entered in the corporation’s securities register. |
| Quebec (QBCA) | The board authorizes the issue and must respect the articles, rights attached to the class and any shareholder agreement or pre-emptive right. |
| Delaware (DGCL) | The board determines the consideration and terms of stock issuance, subject to the certificate of incorporation and any contractual or statutory rights. The board may rely on its judgment that the consideration is adequate. |
| Model Act states (MBCA) | The board determines the terms and conditions of issuing shares, including the consideration, subject to the articles and any pre-emptive rights. |
Before you sign
- Check the authorized capital. Confirm the class, series, rights and number of shares available under the articles or certificate of incorporation.
- Check pre-emptive and transfer rights. A shareholder agreement or articles may give existing holders a right to participate or restrict who can receive shares.
- Document the consideration. State the cash amount, property, services or debt being exchanged and keep proof that it was delivered.
- Check the tax and valuation consequences. Shares issued to a family member, employee or service provider can create tax and reporting issues.
- Use the correct effective date. Do not backdate the resolution or certificate to make the register fit a later decision.
The ownership record is a set of documents
- The resolution authorizes the issue; it does not by itself prove that the consideration was paid.
- The subscription or purchase agreement explains what the holder agreed to acquire and pay.
- The securities register is the corporation’s authoritative record of the registered holder, class and number of shares.
- A certificate or written acknowledgement should match the register, resolution and payment record.
Sample wording
Adapt the wording to your corporation: replace everything in square brackets, and check your articles, bylaws and any shareholder agreement first. Each person signs and dates a copy, and a scanned or electronic signature is usually fine.
Resolutions of the directors of [Corporation name] (the “Corporation”)
WHEREAS the Corporation is authorized to issue [number] [class and series] shares, and [subscriber name] has agreed to subscribe for [number] of those shares for $[amount] per share, for total consideration of $[total];
BE IT RESOLVED THAT:
1. The issue of [number] [class and series] shares to [subscriber name] for total consideration of $[total] is authorized, effective [date], subject to receipt of the consideration.
2. [Name and title] is authorized to accept the subscription, issue the certificate or written acknowledgement, and enter the issue in the securities register.
3. The officers of the Corporation are authorized to sign and deliver any related documents and make any required filings.
The foregoing resolutions are passed by the signatures of all the directors of the Corporation, as of [date].
______________________________
[Name], director
______________________________
[Name], director
Attach the subscription or purchase agreement and proof of consideration. Confirm whether a special resolution or shareholder agreement adds another approval step.
Action by unanimous written consent of the board of directors of [Corporation name] (the “Corporation”)
WHEREAS the Corporation is authorized to issue [number] shares of [class and series] stock, and [subscriber name] has agreed to purchase [number] shares for total consideration of $[total];
RESOLVED, that the issuance of [number] shares of [class and series] stock to [subscriber name] for $[amount] per share, effective as of [date] upon receipt of the consideration, is approved;
RESOLVED FURTHER, that [name and title] is authorized to accept the consideration, issue the certificate or book-entry statement, update the stock ledger and sign related documents; and
RESOLVED FURTHER, that the officers are authorized to make any required securities, tax or other filings.
This consent is signed by all the directors of the Corporation, is effective as of [date], and will be filed with the minutes of the proceedings of the board.
______________________________
[Name], director
______________________________
[Name], director
After you sign
- Receive the consideration and keep the payment evidence or property-transfer document.
- Update the securities register or stock ledger immediately, including the holder, class, number, issue date and consideration.
- Issue a certificate or written acknowledgement if the corporation uses one, and mark any superseded certificate clearly.
- Tell the accountant about the issue and check whether a beneficial-ownership, tax or securities filing is required.
What to keep in your minute book
- The signed directors’ resolution and subscription or purchase agreement.
- Proof of cash, property, services or debt consideration.
- The updated securities register, stock ledger and certificate or acknowledgement.
- Any shareholder consent, waiver, valuation or filing connected with the issue.
Common questions
Can directors issue shares to themselves?
Often yes, if the articles and corporate documents permit it, but the directors should disclose the interest, follow the conflict rules and document the consideration and fairness of the issue. Get advice when the issue changes control or is below fair value.
Does a new share issue need a government filing?
Usually the issue is recorded in the corporation’s internal securities register rather than filed as a standalone event. The corporation may still have beneficial-ownership, tax, securities or annual-report obligations depending on the jurisdiction and transaction.
Can I issue shares for services instead of cash?
Some statutes permit non-cash consideration, but the consideration must be permitted, described and valued appropriately. Check the statute, articles and tax consequences before signing.
This page is general information about corporate resolutions in the United States and Canada, not legal or tax advice. The sample wording is a starting point: your articles, bylaws and any shareholder agreement may require something different, and rules change over time. For advice about your corporation, speak with a qualified lawyer or accountant.
Sources
- Canada Business Corporations Act, shares and securities-register provisions
- Ontario Business Corporations Act, sections 23 and 24
- British Columbia Business Corporations Act, sections 46 and 111
- Alberta Business Corporations Act, share-issuance provisions
- Quebec Business Corporations Act, share-issuance provisions
- Delaware General Corporation Law, section 152
- Model Business Corporation Act (American Bar Association), section 6.21