Expertises connexes

To acquire shares in a company, the buyer must first agree to buy them. This commitment takes the form of an offer, which is called a “subscription.” The Dictionnaire de droit québécois et canadien defines a subscription as an “act by which a person offers to buy marketable securities.”¹ As the subscription is essentially an offer to buy shares, the general rules of civil law regarding any offer to contract apply to it. Therefore, as specified in article 1390 of the Civil Code of Québec, the subscriber, i.e. the person who offers to buy securities, is free to revoke their offer until they receive acceptance from the beneficiary, in cases in which the offer is not subject to any deadline. However, according to the same article, if the offer is subject to a deadline, it is irrevocable before the expiry of the deadline.

Evidently, the proposal must be an actual offer under the law. Article 1388 of the Civil Code of Québec is relevant to this subject because it specifies the following: “An offer to contract is a proposal which contains all the essential elements of the proposed contract and in which the offeror signifies his willingness to be bound if it is accepted.” The offer may be subject to a deadline but also to conditions chosen by the subscriber. These must absolutely be accepted by the beneficiary as set out in writing in the subscription offer.

The offer to acquire shares is not itself a contract. Indeed, the contract is only formed following the acceptance of the subscription offer. Acceptance is made by the board of directors of the company and must include all essential elements of the offer, in addition to not imposing new conditions.

In addition, some shareholders may benefit from what is called a “preferential subscription right,” which allows them to subscribe to shares issued in the same class, on a preferential basis. This right may also be known as the “pre-emptive right,” as provided for by the Canada Business Corporations Act.

There may be cases in which the subscription offer does not come from a third party but rather, directly from the company. The beneficiary of the offer is therefore presented with the option of subscribing to shares for a determined amount and, if the offer is accepted, the company is then obliged to issue them to the beneficiary. Whether you are interested in acquiring shares or in making a subscription offer as a company, the Bernier Fournier team is available to support you in drafting a complete offer. In addition, our qualified team can support you throughout the drafting of the subscription contract. Our experienced lawyers can support you in drafting a contract that meets your expectations.

Regardless of the source of the offer, there is one very important element to consider when issuing shares. Regulation 45-106 respecting prospectus exemptions (V-1.1, r. 21)² should be considered before even making an offer to subscribe. The prospectus is a document containing very detailed information on the activities and financial situation of a company, which the company must file with the Autorité des marchés financiers if it wishes to issue shares to the general public. Prospectus production is time-consuming and expensive, but it allows members of the public to make an informed investment decision. However, article 2.4 of the regulation provides for several cases in which a company can obtain a prospectus exemption. While the company saves a lot of money by being exempt from the prospectus, there is a downside to investing in exempt securities, as they are often riskier investments. Lawyers from Bernier Fournier can accompany you in checking whether you can be exempted from the prospectus and whether it would be advantageous for your business.

If you wish to invest by subscribing to shares exempt from a prospectus, it is very wise to consult a professional in commercial law, such as those on our team, who can advise you and weigh the advantages and disadvantages of the desired investment, while ensuring that your legal and financial interests always come first.


¹Hubert REID, Dictionnaire de droit québécois et canadien, 5th ed., Montréal, Wilson & Lafleur, 2015.
²Regulation 45-106 respecting prospectus exemptions, V-1.1, r. 21.