The formalities provided for by law must be respected when shares are issued, whether for an initial issue following the incorporation of the company or any other subsequent issue. These formalities are the same under both Quebec and federal law.
It should first be noted that a share issue is a contract between the share subscriber and the company. The subscriber, by way of a letter of subscription or offer to subscribe, offers the company to subscribe to a certain number of shares, at a price per share that he offers. For example, following the incorporation of a corporation, a subscriber may offer to subscribe for 100 common shares for a consideration of $1 per share. Under Quebec law, which is flexible in this regard, it is possible to offer to subscribe for shares for which the consideration will be paid in whole or in part after the issue, and the shares so issued will be subject to the call. At the federal level, shares must be fully paid up at the time of issue. The consideration for the issue of shares may be payable in cash, goods or services.
Once the company has received the subscription offer, the board of directors must vote to authorise the issue of shares. This power of directors to authorise a share issue cannot be delegated to officers of the company or to any other person. The intervention of the board of directors is therefore necessary to issue shares.
Once the issue of shares is authorised, the issue of shares is evidenced by the registration of the issue in the company's securities registers and the issue and delivery of a share certificate evidencing the shares so issued. However, if the company is incorporated under provincial law, the board of directors may decide that the shares are issued without a certificate. In that case, the mere entry of the issue in the securities register is sufficient to establish the existence of the shares. A written notice containing the same information as a share certificate must still be delivered to the shareholder
At the administrative level, the three shareholders holding the largest number of voting rights must be declared to the Registraire des entreprises. A company is therefore not required to declare and make public a shareholder holding non-voting shares.