What is a share transfer?
Besides having shares issued to oneself from the corporation, a person can also become a shareholder by way of a transfer of shares.
A transfer of shares occurs when one shareholder agrees to transfer the right of ownership of a certain number of shares to another person, who may or may not be a current shareholder. The transfer of shares may be made for consideration, i.e., for a purchase price of money or some other form of payment, or without consideration, i.e., without any such payment. Tax consequences of any such transfer should be discussed with competent professional advisers (tax lawyers and accountants).
Typically, share transfers are not effective until approved by the board of directors, which signs resolutions to give effect to the transfer. However, it is possible that there are further restrictions on share transfers in a corporation's Articles of Incorporation, by-laws or in a shareholders agreement. The restrictions can apply to all transfers or only to those in specific cases. You should review your corporation's Articles of Incorporation, by-laws and any shareholders agreement to determine if restrictions apply.
To learn more or to perform some compliance check out our site: https://www.corpcentre.ca/compliance-centre/