Shareholders, Directors and the "Legal Representative": Who Makes the Decisions in a Canadian Corporation?

Canada has no legal representative role; what shareholders, directors and officers each decide, and who can sign

Scott Tang, CPAUpdated 2026-11-032026 rules7 min read

A Chinese company's business licence names a legal representative (法定代表人). When this person signs and applies the company seal, they act for the company, and when something goes wrong, they are often the first person held to account. Many foreign business owners who come to Canada to incorporate start by asking: "Who should we name as the legal representative?"

Canadian corporate law has no "legal representative" position. The work is divided among three roles: shareholders, directors and officers. Who can sign for the company doesn't depend on whose name is on a licence; it depends on whom the board of directors has authorized.

None

Canadian corporations have no "legal representative" position

An Ontario private corporation needs only 1 director at minimum

2/3

A special resolution voted on at a meeting generally needs at least two-thirds of the votes actually cast; written resolutions and class votes have separate requirements

Three roles, each overseeing the next

1Shareholders

Hold the company's shares

For example, the parent company holds 100%

Elect and replace directors

Usually a simple majority is enough

Decide "who runs the company"

2Directors

Manage the company's major affairs

Issuing shares, declaring dividends, approving financial statements

Appoint officers

Decide who has signing authority

Decide "how the company is run"

3Officers

President, secretary, etc.

Appointed by the directors

Day-to-day operations, signing contracts

Within the authority given by the board

Handle "how things actually get done"

In a small company owned by an individual, one person often fills all three roles. In a wholly owned subsidiary, the shareholder is the parent company. The same person sent by the parent can be a director and the president, and can also be the parent's authorized representative who signs shareholder resolutions. Legally these are separate capacities, so when you sign a document, state clearly in which capacity you are signing.

Who decides what

Matter	Who decides
Electing and replacing directors	Shareholders (usually by majority)
Amending the articles: company name, share classes, various restrictions	Shareholders, by special resolution (generally two-thirds of the votes cast; where the rights of a class of shares are affected, that class also votes separately)
Amalgamation, selling substantially all of the assets, dissolving the company	Shareholders, by special resolution (as above)
Issuing shares	Directors
Dividends	Declared by the directors
Approving the annual financial statements	Approved by the directors, then presented to the shareholders
Appointing officers, setting signing authority	Directors
Day-to-day operations, signing contracts, spending	Officers or others authorized by the board

Shareholders can also sign a unanimous shareholder agreement, which takes some powers that would otherwise belong to the directors and gives them to the shareholders; this is common when several shareholders form a joint venture. Note that when powers move to the shareholders, the matching directors' liabilities may move to the shareholders too. Shareholder resolutions can also be signed in writing instead of holding a meeting, but the signing threshold depends on the jurisdiction and the type of resolution:

Ontario non-offering corporations · ordinary resolutions
Since the 2021 amendments, an ordinary resolution can be passed in writing by shareholders holding a sufficient majority of the votes; the company then generally has to notify the voting shareholders who didn't sign within 10 business days.
Other written resolutions
Ontario special resolutions and similar resolutions, and written resolutions of federal corporations, generally still have to be signed by all the shareholders entitled to vote.
The articles and agreements can be stricter
The articles of incorporation or a unanimous shareholder agreement can set a higher threshold, and what they say prevails.

(The above reflects the general rules under Ontario and federal corporate law. The actual position depends on the specific provisions, the articles and any agreements; for complex situations, please have a lawyer confirm.)

Compared with a Chinese company

	Chinese company	Canadian corporation
Represents the company externally	The legal representative, registered on the business licence	No such position; an officer or signing officer authorized by the board
Company seal (chop)	Very important in practice (its legal effect is a question for a Chinese lawyer)	A corporate seal is optional; the authorized person's signature is generally what counts
Shareholders' meeting	Votes at a meeting	Shareholder resolutions can be signed in writing; a meeting isn't always needed
Board of directors	A board of directors or an executive director	Directors; a private corporation needs at least 1
Management	General manager	Officers (president, secretary, etc.)
Registered capital	Subscribed, and shown on the business licence	No minimum capital and no capital verification

How a wholly owned subsidiary works in practice

The parent is the sole shareholder
Shareholder resolutions are signed by a representative authorized by the parent. Once a year there is a shareholder resolution to elect the directors and confirm the previous year's matters; in a private corporation, if all the shareholders consent, they can also decide not to appoint an auditor.
Put signing authority in a resolution
When you open a bank account or sign a lease or a major contract, the other side will want to see a board resolution confirming that the person signing is authorized. Settle signing authority when you incorporate.
Directors' liabilities
Directors owe the company a duty of loyalty (fiduciary duty) and a duty of care; in certain circumstances, directors are personally liable for payroll deductions and GST/HST that the company failed to remit; in Ontario, directors can be liable for up to 6 months of employees' unpaid wages and up to 12 months of unpaid vacation pay.
It's all in the Minute Book
Who the shareholders and directors are, who has signing authority and what resolutions have been passed are all recorded in the company's own Minute Book, not on a government-issued licence (see Is There a "Business Registration Bureau" in Canada? Minute Books, Government Filings and Share Registers in this series).

When directors or officers change later

In Canada, changing a director, the president or a signing officer doesn't mean going to the government to "amend the licence", but there are four steps to complete:

1
Pass a resolution
Shareholders elect new directors, or directors appoint or remove officers
2
Update the Minute Book
Register of directors, register of officers, signing authority
3
File within 15 days
Ontario: file a Notice of Change; federal corporations: file the change of directors
4
Tell the bank
If the signing officers change, the bank's signing authority must be updated too

If you miss the government filing, the public record still shows the old directors. Former directors may still be treated as directors and contacted as such, and new directors will find the records don't match when they deal with the bank or sign contracts.

How Sheng Qian CPA can help

Settled at incorporation
Who the shareholders, directors and officers will be, and how signing authority is granted, considered together with your future tax filings; incorporate through EasyU Incorporation, with Express incorporation available.
Initial resolutions and by-laws in place
The Premium package includes an electronic Minute Book: by-laws, the initial directors' and shareholders' resolutions, and the registers.
We file later changes
When directors, officers or the address change, we prepare the routine resolutions, update the Minute Book and file the Notice of Change within 15 days.
Explained in Chinese
Your parent company's directors and finance team aren't familiar with Canadian rules, so we explain in Chinese what each document they sign is for.

Who does what. We handle routine resolutions, registers and government filings. Shareholder agreements, disputes between shareholders, complex reorganizations and debt-to-equity conversions need to be drafted or reviewed by a lawyer; we work alongside the lawyer and provide tax advice.

Sources

Ontario: Business Corporations Act (OBCA)
Federal: Canada Business Corporations Act (CBCA)
Background reading (unofficial): Fasken – Directors' liability for unpaid wages

Disclaimer

This article is general information only and is not legal or tax advice. Every company's situation is different; please consult a lawyer or a CPA about your specific arrangements. Service fees are as set out in our written quote.

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