What is a Shareholder?
Every corporation has at least one shareholder. Shareholders own the corporation by holding equity or “shares” in the corporation. But generally (especially in larger companies), shareholders do not actually run the corporation. Instead, they elect one or more directors to a “board of directors” which oversees the business and affairs of the corporation. In turn, directors appoint officers (such as the CEO) to manage the day-to-day business of the corporation. See here and here for what it means to be a director and an officer of a corporation.
When you incorporate your business with SkyLaunch, our online incorporation tool will include all the necessary documentation and approvals to get you set up initially as the sole shareholder, director and officer of your corporation.
Shareholder Liability
As we discuss in “Why and When Should I Incorporate?” here, the shareholders of an incorporated business are usually not liable for the corporation’s debts and a shareholder’s personal assets generally cannot be seized to settle claims against the corporation. This added layer of liability protection is not available to sole proprietors, where the business and its owner are one and the same.
"Equity" vs "Shares"
Shareholders are entitled to the property and assets of the corporation at the end of its life-cycle (e.g., when it is wound up or dissolved), after making sure that all outstanding debts owed to creditors are settled - that's the shareholder's "equity" in the company.
Generally, every corporation has at least one class of common shares. It is possible to create different classes of shares such as “preferred shares” or “non-voting shares”. Shareholders holding different classes of shares will have different voting rights and different entitlements to the corporation’s assets on dissolution (i.e., different kinds of "equity"). SkyLaunch’s online incorporation tool will initially establish a single class of standard common shares, with you as the sole shareholder.
If you want to create different classes of shares, and/or invite additional shareholders to join you, you should discuss with a lawyer first. This is because you will probably want a shareholder agreement and get tax advice to make sure everything is set up correctly right from the get-go. SkyLaw can help!
Annual Shareholder Meetings
At the end of each financial year, shareholders must meet and pass certain “annual resolutions” to, among other things, elect directors for the upcoming year and approve the corporation’s financial statements. But don’t worry, SkyLaunch’s Complete Compliance Package can help take these worries off your plate.
