What are treasury shares in the context of an Ontario corporation?

Under the Ontario Business Corporations Act, a corporation that acquires its own shares must cancel those shares immediately upon acquisition — they cannot be held as "treasury shares" in the way that some other jurisdictions (notably the United States) permit. This is an important distinction from US corporate law, where corporations frequently buy back and hold their own shares on their balance sheet.

In Ontario and under the Canada Business Corporations Act (for federal corporations), when a corporation purchases or redeems its own shares, those shares cease to exist. They cannot be reissued. If the corporation later wants to issue more shares, it must issue new shares from its authorized-but-unissued pool. This means the authorized share count decreases as shares are repurchased (unless there are unlimited authorized shares, which is the case for most Ontario corporations that follow modern practice).

For practical purposes, this means there is no mechanism in Ontario corporate law to hold shares in reserve after repurchase, and the concept of "treasury stock" as used in US financial reporting does not apply. If you are reviewing financial statements or term sheets that reference treasury shares, clarify whether the reference is to Ontario law or another jurisdiction. A corporate lawyer can help you understand the implications.