Share Classes

Definition

A share class groups shares with specified rights and restrictions, including voting, dividends, redemption and distribution on dissolution. One class may be sufficient for a sole founder. Multiple classes should serve a defined financing, ownership or succession purpose, rather than being added automatically.

Statutory and article rights

Under the CBCA, a single class has equal rights including voting, declared dividends and remaining property on dissolution. Where there are multiple classes, the articles set their rights and allocate the statutory core rights among them. CBCA section 24

BC companies must follow the BC Act and their own articles, including its provisions on classes and special rights. Do not assume the wording or amendment process is identical to the CBCA. BC Business Corporations Act, Part 3

A non-voting class can still have statutory class votes or approval rights on certain fundamental changes. Preferred shares have the priority, dividend, redemption and conversion terms actually written into their rights; the label alone does not establish those terms.

Illustrative structure

This is an illustration, not standard articles. An authorized class need not have issued shares. An actual issuance requires valid approvals, consideration and corporate records. Changing rights can require shareholder or class consent and other statutory procedures.

Tax and reporting

Share-class design does not remove TOSI, attribution, benefit or valuation rules. Family dividends and estate freezes require transaction-specific analysis. A corporate-law power to declare a dividend does not establish its tax result. CRA TOSI guidance

Record all issuances, transfers and redemptions in the securities records. T2 Schedule 50 is a separate tax disclosure, not the complete share ledger: private corporations report shareholders meeting the 10% common/preferred ownership threshold under the form's instructions, with the guide's maximum of ten shareholders. Other ownership-transparency registers can have different tests. Schedule 50, T2 guide chapter 2

Related concepts

Share classes sit inside the jurisdictional choice covered in Federal vs. Provincial Incorporation and are governed alongside a shareholders' agreement. When dividends are paid, the classification into eligible vs. non-eligible dividends matters, and TOSI can recharacterize the tax. The balances land in GIFI Equity, and the compensation decision sits on top of Salary vs. Dividends.