Hello friends! Hope you are enjoying the weekend.
I have a question about how to complete a Schedule 50 when there are no shareholders.
Long story short, the corp never issued shares in the first fiscal year (already over), but will be issuing shares to a holding co in the current fiscal year.
Would you complete the S50 indicating the holding co as the shareholder or just not complete it as technically there were no shareholders in the fiscal year in question?
Thank you for your help all!
Are you sure there are no share issued? Did you check the incorporation paper to confirm that?
I have seen couple times, where the owners incorporated companies on their own, as a requirement, shares were issued, without any par value, so they thought shares were never issued.
It is almost impossible for a corporation to not have any shareholders. Even though the Articles of Incorporation do not include this information, 99.9% of the time a private corp is registered, the listed Directors usually are also the shareholders. The lawyer or accountant that set up the corp should have this information as it is required in the corporate minute book.
If this is the first year of filing the T2 (even if the corp has been registered for longer), then you can include the details of the new HoldCo in S50.
Thanks for your reply. Yes, I am pretty sure no shares were issued. The director formed the corporation (federal) himself, the article has the first directors’ information but no resolutions to issue shares were signed and no share register that shows any shares issued.
Thanks very much for your reply Shaun. I agree most of the times the first directors are also shareholders. For clarification, the director formed the corporation (federal) himself, and no resolution to issue shares or a share register exists. Also, no monies were paid to buy the shares. So I am pretty sure there were no shareholders.
I was also a bit concerned about the fact that the holdco is registered over a year later than the opsco, so thanks for clarifying that this should be ok.
Is it possible that the minute book isn’t up to date and that the shares have been subscribed for?
Sounds like a typical “DIY” corporation. Maybe people should bother to engage a lawyer and get it right…
My first thought was that the governing act (I assume the CBCA in this case) defines the Incorporators as the first shareholders and directors, by default. I’ve been unable to find such a reference, but have only looked quickly.
There ARE non-share corporations (in Alberta under Sec 9 of the ABCA assuming I remember correctly - but these are generally Not-for-Profit or Registered Charitable organizations).
Ok. I didnt realize this was a owner registered corp. I am sure the owner thought he could do and save themself a few bucks by not engaging a professional to set the corp. The fact that no shareholder resolutions, directors resolutions, directors and officers register, etc, is not prepared should be a big concern as the company is non-compliant with Business Corporation Act. I would highly recommend you confirm the set up of HoldCo is compliant.
The fact the HoldCo was registered after OpCo is not an issue since these types of transactions are common. Was there a T2 filed by OpCo in year 1 and if yes, what was reported in equity on the Opening Balance Sheet?
This was a “DIY” incorporation by an owner/operator it sounds like. In all likelihood the probably didn’t need a Fed Corp and been fine with the Prov Corp, so now there is additional annual returns at the federal level that need to be completed…trying to save a few bucks, ends up costing more in the long run always is my experience…
@killerbeedee
“I have a question about how to complete a Schedule 50 when there are no shareholders.”
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I don’t post tax advice here - but - This situation seems too dangerous not to comment on on a practice level…
I don’t know who your professional insurer is, but likely they will have a fatal heart attack if work such as tax filings are being done when the incorporation documents are not on file and have not been reviewed: memorandum, articles, central securities register, register of directors, and authorization appointing them. 
There is the danger that legally speaking, you are this fellow’s personal accountant, never having been legally engaged by authorized persons in the corporation’s legal documents for the corporation.
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Once you have attended to the basics of the corporations legal documents, I think you will find that your posted question will be a non-issue…
It seems obvious that this must have been a DIY incorp, and now they are going to get in even further out of their depth with doing holding company etc without a lawyer.
Also, Provincial law generally requires that they ALSO register in the Province, so that may well also be not compliant to lawfully carry on business in a Province.
They will be better off, and you will be a lot safer, if you tell them to ask their lawyer to send you the “permanent file” docs you need, and keep repeating that to them as often as necessary…
Stay safe out there!
I don’t often agree entirely with @joe.justjoe1 
… but this needs to be properly repaired PRIOR to filing.
This needs a legal not an accounting repair first. People really do need to recognize that corporations carry legal responsibility…they’re not just a toy.
While failing to register as an extraprovincial corporation is an annoyance, it’s not a big factor. Just an more expensive one. No idea what the original incorporator was thinking, but the thought that went into it was poor.
Thanks Shaun. No T2 was filed yet and they were asking us to do their T2 for the 1st fiscal year. That’s infact a great question… I need to figure out what put in the equity section of the balance sheet of year 1 since that year is already past and the resolution for share issuance wouldn’t be drafted up until later this month … lol.
thanks for the advice, Joe. many people don’t understand the importance of organizing corporations properly.
100% agree. definitely need to see the properly drafted and signed legal documents before filing. thanks for your help!