I have a situation where a client decided to create a corporation online without using a lawyer. Of course step were missed and while they created a corporation, they did not issue any shares. So my client is currently a director, but not a shareholder. They have since contacted a lawyer to properly complete the organizing of the corporation.
What I want to know is can we set a year-end date to a time when there were no shareholders? There is a taxable loss for the period we are looking at, so the SBD is not an issue this period.
Given that there was an “intention” to create a properly constructed corporation, my suspicion is that the lawyer will write the issuance of shares as contemplated at the time, with an effective date of the incorp date or close to it.
Wait until that is done, if that’s the route chosen.
“So my client is currently a director”
I doubt that VERY much, as this appears a legal impossibility.
…until the lawyer has finished doing his thing.
The lawyer will almost certainly advise that the procedure he is carrying out is “rectification”, likely with a court order.
In which case there will legally be no time period at all in which there are no shares and no shareholder.
Clients (and their accountants) cannot just simply make up things legally speaking - proper compliance needs to be followed.