How Do I Add or Remove a Director or Shareholder in a Federal Corporation?

Federally, a Canada Business Corporations Act (CBCA) corporation handles director changes and shareholder changes through two entirely different mechanisms: directors are elected or removed by shareholder vote and reported to Corporations Canada, while shareholders are added or removed by issuing or transferring shares inside the corporation’s own records, with no government filing in most cases. The steps below cover both.

Step 1: Identify whether you are changing a director or a shareholder

These are separate legal events under the CBCA, and mixing them up is the most common source of confusion. A director sits on the board and manages the corporation; a shareholder owns shares. The same person is often both, but the CBCA does not require it: directors are not required to hold shares unless the corporation’s own articles say so, and shareholders have no automatic right to a board seat. Confirm which change you’re actually making before choosing a process.

Step 2: To add a director, hold an election by ordinary resolution

Directors of a CBCA corporation are normally elected by the shareholders, by ordinary resolution (a simple majority vote), at the first meeting of shareholders and at each subsequent annual meeting (s. 106(3)). A director elected this way holds office for a term ending no later than the close of the third annual meeting following the election. If no election takes place at an annual meeting, for example because the meeting is skipped or delayed, the existing (incumbent) directors simply continue in office (s. 106(6)); the board doesn’t go vacant by default.

Step 3: To remove a director, pass an ordinary resolution at a special meeting

Shareholders can remove a director before their term ends by ordinary resolution passed at a special meeting called for that purpose (s. 109(1)). There’s one exception: if a class or series of shares has an exclusive right to elect one or more directors, a director elected that way can only be removed by an ordinary resolution of the shareholders of that specific class or series (s. 109(2)). The vacancy left by a removed director can be filled at the same meeting, or later under the CBCA’s separate vacancy-filling rules (s. 109(3)).

Step 4: A director can also leave voluntarily by resignation

A director doesn’t need to be removed by the shareholders if they choose to step down. Under s. 108(2), a resignation becomes effective when the written resignation is sent to the corporation, or at a later date specified in the resignation, whichever is later. No shareholder vote is needed for a resignation to take effect.

Step 5: Report the director change to Corporations Canada within 15 days

Once a director is added, removed, or resigns, the corporation must notify Corporations Canada (referred to in the Act as “the Director”) within 15 days, using the form Corporations Canada fixes, and Corporations Canada then files it (s. 113(1)). This is done through Corporations Canada’s online “Update director information” filing, which likewise requires active business corporations to report any change within 15 days. According to Corporations Canada’s fee schedule, updating current director information online is free and takes one day to process. Separately, a director who personally changes address must notify the corporation of that change within 15 days (s. 113(1.1)), so the corporation can keep its own filing current.

Step 6: To add or remove a shareholder, issue or transfer shares in the securities register

Adding or removing a shareholder is not something reported to Corporations Canada in the ordinary case. Under the CBCA, a share issued in registered form is a negotiable instrument and its transfer is recorded in the corporation’s own securities register (s. 48, s. 49(3)), unless the transfer is restricted and that restriction is noted on the share itself. In practice this means: to add a shareholder, the corporation issues new shares to them and records the issuance; to remove a shareholder, their shares are transferred (sold, gifted, or redeemed) and the transfer is recorded. The corporation’s articles or a unanimous shareholder agreement may restrict who shares can be transferred to, which is worth checking before a transfer is attempted.

Step 7: Check whether the change affects the individuals with significant control (ISC) register

Since June 2019, most CBCA corporations have had to keep an internal register of individuals with significant control (an “ISC register”), and since January 22, 2024 they must also file certain ISC information with Corporations Canada, some of which becomes public. An individual with significant control is someone who owns, controls, or directs 25% or more of the corporation’s shares (alone, jointly, or in concert with others), or who otherwise has “control in fact” over the corporation without owning shares. If a director or shareholder change crosses this 25% threshold, whether by adding a new large shareholder, removing one, or a director gaining control-in-fact, the ISC register and filing need to be updated separately from the share transfer itself.

What this does not cover

This article addresses only the federal CBCA process. If the corporation was instead incorporated provincially in Ontario or Alberta, the governing statute, forms, and filing body are different, and that process was not researched here.