- Under the Business Corporations Act (Ontario) ("OBCA"), a resolution is simply a formal decision made by shareholders (or directors, in some contexts) — but the threshold required to…
- - Amending the Articles of Incorporation — changing the corporate name, share structure, or other terms set out in the Articles (see our companion article on that process).
- - Electing directors at the annual meeting.
Corporate decisions in Ontario aren't all approved the same way. Some routine matters pass with a simple majority vote. Others — the ones that fundamentally change the corporation — require a higher threshold and more formal process. Understanding when Ontario corporate law demands a special resolution rather than an ordinary resolution helps directors and shareholders avoid a defective approval that can undermine an important decision later.
The Basic Distinction
Under the Business Corporations Act (Ontario) ("OBCA"), a resolution is simply a formal decision made by shareholders (or directors, in some contexts) — but the threshold required to pass it depends on what's being decided.
- Ordinary resolution — passed by a simple majority of the votes cast by shareholders entitled to vote on the matter. This is the default for most routine shareholder business, such as electing directors or appointing an auditor.
- Special resolution — requires a higher threshold, generally at least two-thirds of the votes cast by shareholders entitled to vote, and is reserved for fundamental changes to the corporation.
The higher bar for a special resolution exists because these decisions can materially affect shareholders' existing rights, and the law wants more than a bare majority behind them.
What Typically Requires a Special Resolution
- Amending the Articles of Incorporation — changing the corporate name, share structure, or other terms set out in the Articles (see our companion article on that process).
- Amalgamating with another corporation.
- Continuing the corporation under the laws of another jurisdiction (for example, moving from Ontario incorporation to federal, or vice versa).
- Selling, leasing, or exchanging all or substantially all of the corporation's assets outside the ordinary course of business.
- Voluntarily dissolving the corporation.
- Certain amendments affecting the rights of a specific class of shares, which may also require a separate class vote even from shareholders who don't otherwise have general voting rights.
The common thread: these are changes to the corporation's fundamental structure or existence, not day-to-day operating decisions.
What Typically Only Needs an Ordinary Resolution
- Electing directors at the annual meeting.
- Appointing (or waiving the appointment of) an auditor.
- Approving routine financial statements presented at the annual meeting.
- Most other shareholder business that isn't specifically designated as requiring a higher threshold by the OBCA or the corporation's own Articles or by-laws.
Side-by-Side Comparison
| Feature | Ordinary Resolution | Special Resolution |
|---|---|---|
| Vote threshold | Simple majority | At least two-thirds |
| Typical use | Routine shareholder business | Fundamental corporate changes |
| Examples | Electing directors, appointing an auditor | Amending Articles, amalgamation, dissolution |
| Class vote possible? | Less common | Common where share class rights are affected |
Can a Corporation's Own By-Laws Require a Higher Threshold?
Yes. The OBCA sets the statutory minimum thresholds, but a corporation's Articles, by-laws, or a unanimous shareholder agreement can impose stricter requirements — for example, requiring unanimous shareholder consent for certain decisions rather than the statutory two-thirds. This is common in small, closely-held corporations where founders want extra protection built in beyond what the statute requires by default. Always check the corporation's own governing documents in addition to the OBCA's default rules.
Why Getting the Threshold Right Matters
A resolution passed at the wrong threshold — for example, treating a fundamental change as if it only needed a simple majority — can be challenged as invalid. This isn't just a technical concern: if a corporation later needs to prove to a lender, an investor, or a buyer's due-diligence team that a past amendment or amalgamation was properly approved, a defective resolution can create real problems at the worst possible time. Getting the process right when the decision is made is far easier than trying to fix it retroactively.
Steps for Getting a Special Resolution Right
- Confirm the matter actually requires a special resolution under the OBCA or the corporation's own governing documents.
- Give proper notice of the meeting (or prepare a written resolution in lieu of a meeting, signed by all voting shareholders) describing the substance of the resolution.
- Confirm whether a separate class vote is required for any share class whose rights are affected.
- Record the vote and result accurately in the minutes, including that the two-thirds threshold was met.
- Keep the signed resolution and minutes in the corporate minute book as part of the corporation's permanent records.
Frequently asked questions
Does a special resolution always require a formal shareholder meeting?
No — like an ordinary resolution, a special resolution can generally be passed by a written resolution signed by all shareholders entitled to vote on the matter, in lieu of holding a meeting. The higher vote threshold applies either way; a written resolution in lieu of a meeting just needs the signatures of all those entitled to vote, which functionally exceeds two-thirds since it requires everyone.
What if shareholders who don't normally have voting rights are affected by the change?
Certain changes to share class rights can trigger a separate class vote even for shareholders whose shares are otherwise non-voting, because the OBCA protects a class's existing rights from being altered without that class's own approval. This is a frequently overlooked step in share-structure amendments.
Can directors approve a special resolution on their own, without shareholders?
No — directors can typically initiate and recommend the change, but a special resolution by definition requires shareholder approval at the higher threshold; directors alone cannot substitute for that vote.
Is a two-thirds vote the same everywhere in Canada?
The two-thirds threshold described here applies under Ontario's OBCA. Other corporate statutes, including the federal CBCA, use broadly similar concepts but always check the specific statute and the corporation's own governing documents rather than assuming identical thresholds across jurisdictions.
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