Redemption of shares

Redemption of shares


What is a redemption of shares?

Redemption of shares refers to the process where a corporation repurchases its own shares from a shareholder at a price specified in the articles of incorporation. This can be at the option of the shareholder, at the option of the corporation, or both, as defined in the share structure. 

What is Redemption?

Redemption is a contractual agreement between a corporation and a shareholder where the corporation buys back its own shares from the shareholder. 

It's a way for a corporation to retire or cancel outstanding shares, effectively reducing the number of shares outstanding. 

Redemption is often used in conjunction with redeemable preference shares, which have a call price set at the time of issuance. 

When does Redemption Occur?

Redeemable Preference Shares: If a corporation issues redeemable preference shares, it has the right to call (redeem) those shares back from shareholders at a predetermined price. 

Shareholder Option: Some shares may allow the shareholder to redeem them at a specific price or based on a formula. 

Consensual Redemption: The corporation and shareholder may agree on a redemption, potentially through a contract or board resolution. 


To learn more or to perform some compliance check out our site: https://www.corpcentre.ca/compliance-centre/


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