How Do You Transfer Shares of a Private Corporation?

How Do You Transfer Shares of a Private Corporation? (Canada, 2025 Guide)

Transferring shares of a private corporation is a common way for individuals or entities to become shareholders after the company has already been incorporated. While initial ownership is outlined in the Articles of Incorporation, shares may later be transferred with or without consideration (such as money or other value). However, depending on the nature of the transfer, tax consequences may apply.

Share transfers can be made to both individuals and business entities, including partnerships and corporations. Still, private corporations are subject to strict rules that must be followed before a transfer becomes valid.

Restrictions on Share Transfers in a Private Corporation

Private corporations are not freely transferable like public companies. A share transfer cannot proceed without a directors’ resolution approving the transfer. Additional restrictions can be found in the:

• Articles of Incorporation
• Shareholders’ Agreement

These restrictions help maintain control over who becomes an owner, since shareholders are often also employees, officers, or directors.

Common Share Transfer Restrictions Include:

• Who may buy or sell shares
• Limits on the number of shares that can be transferred
• Requirements that existing shareholders consent to the transfer
• Shareholder resolution approving the transfer
• Right of First Refusal (ROFR): Shares must be offered to existing shareholders before outsiders
• Rules for transfers triggered by key events such as:
  • Death
  • Resignation or dismissal
  • Personal bankruptcy
  • Divorce
• Conditions such as:
  • Non-competition clauses
  • Confidentiality provisions
  • Dispute resolution processes
  • How the agreement may be amended or terminated

These restrictions protect the corporation from unexpected ownership changes that could disrupt operations or relationships.

Documents Required to Transfer Shares

A valid share transfer typically requires the following documents:

1. Share Purchase Agreement (SPA)

If the transfer involves a sale, the SPA outlines the price per share and essential terms of the transaction.

2. Directors’ Resolution Approving the Transfer

The board must formally approve the share transfer or SPA.

3. Updated Share Certificates

New share certificates must be issued, signed by the corporation’s president and secretary.

• If only some shares are transferred, two certificates are created:
  
  
  • One for the transferred shares
  • One for the remaining shares in the seller’s name

4. Updated Corporate Ledgers and Registers

The following must be updated:

• Shareholders’ Ledger
• Share Transfer Register
• Shareholders’ Register
   These documents reflect the new ownership structure.

5. Resignations and Form 1 Filing (If Applicable)

A shareholder who exits the corporation may also resign as a director or officer.

• Resignation resolutions must be prepared
• A Form 1 Notice of Change must be filed with the Ontario Business Registry to update government records

Share Transfers in Public Corporations

Public corporations follow rules under the provincial Securities Transfer Acts. Shares are traded openly through stock exchanges such as:

• Toronto Stock Exchange (TSX)
• TSX Venture Exchange
• Canadian Securities Exchange
• Montreal Exchange
• And others

Transfers occur through licensed stockbrokers or investment dealers, unlike private corporations, where the process is internal and document-driven.

Why Work With Kalfa Law Firm?

Transferring shares in a private corporation involves legal, tax, and administrative steps that must be performed carefully to avoid errors or unnecessary tax liabilities.
 Kalfa Law Firm can help you:

• Prepare all required corporate documents
• Ensure compliance with laws and shareholder agreements
• Minimize tax consequences related to capital gains
• Complete filings and update corporate records properly

Kalfa Law Firm provides strategic legal and tax guidance to ensure your share transfer is completed smoothly and compliantly. Contact us today to get started.

FAQs:

-Shira Kalfa, BA, JD, Partner and Founder

Shira Kalfa is the founding partner of Kalfa Law Firm. Shira’s practice is focused in corporate-commercial and tax law including corporate reorganizations, corporate restructuring, mergers and acquisitions, commercial financing, secured lending and transactional law. Shira graduated from York University achieving the highest academic accolade of Summa Cum Laude in 2012. She graduated from Western Law in 2015, with a specialization in business law. Shira is licensed to practice by the Law Society of Ontario. She is also a member of the Ontario Bar Association, the Canadian Tax Foundation, Women’s Law Association of Ontario, and the Toronto Jewish Law Society. 

© Kalfa Law Firm 2021, updated April 2026.

The above provides information of a general nature only. This does not constitute legal advice. All transactions or circumstances vary, and specified legal advice is required to meet your particular needs. If you have a legal question you should consult with a lawyer.