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Frequently asked questions > Company > Business Corporation > How is made a redemption of shares of a business corporation?

How is made a redemption of shares of a business corporation?

Both in Canada and in Quebec, the board of directors of the business corporation can decide to redeem some issued shares of the share capital (also called the share capital in the federal jurisdiction). This redemption can be asked by the shareholder or unilaterally decided by the business corporation. It is necessary to remember that the rights and obligations attached to each class of shares are provided in the description of the share capital annexed to the incorporating documents of the business corporation. Some shares will therefore be redeemable at the option of the holder, at the option of the business corporation, or both together. The shares can also be redeemed consensually between the shareholder and the business corporation, being then by mutual agreement. A contract of redemption of shares can be drafted to agree on the terms of redemption or simply a resolution of the board of directors can be adopted for that purpose. The shareholder will therefore endorse his share certificate(s) in favor of the business corporation. The redemption will be recorded in the registers of the minute book and, if the shareholder sees himself redeemed in full, the Québec enterprise registrar will have to be informed about the change in the shareholding if the business corporation has its head office (called the registered office in the federal jurisdiction) situated in the province of Quebec.

In Quebec, the business corporation can acquire or redeem issued shares of its share capital only if these shares have been fully paid. Unless all the shareholders consent, whether their shares are carrying or not voting rights, the business corporation that is not a reporting issuer and has acquired by mutual agreement issued shares of its share capital must, within 30 days after the acquisition, notify its shareholders about it.

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