Bringing Family Into Your Ontario Company

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Why owners bring family in, and what it changes

Owners bring family members into a company for many reasons: a spouse who works in the business, children who may take it over, a relative who invests, or a plan agreed with the family’s accountant. Whatever the reason, the moment a family member holds shares, sits on the board or benefits from a trust that owns shares, the company’s legal relationships change. Ownership is recorded, rights attach, and the people involved gain legal standing they did not have before. Advising on these changes is part of our share structure work. It also touches our estate planning for business owners.

Tax often drives these decisions, and that conversation belongs with your accountant. This page covers the legal side: how shares are issued, who can be a director, how trusts and family law interact with the company, and what the records must show.

The main routes, step by step

Decide the role. Owner of shares, director, officer, employee, or beneficiary of a trust. Each brings different rights and duties.
Check what the articles allow. The articles set the classes of shares and their rights. Adding a new class, for example non-voting shares for children, usually needs articles of amendment filed with the province.
Issue the shares properly. Under section 23(1) of the Business Corporations Act (OBCA), the directors issue shares at the times, to the people and for the consideration they decide, subject to the articles, by-laws and any unanimous shareholder agreement. Section 23(3) says a share cannot be issued until it is fully paid in money, property or past services worth at least the fair equivalent of the money the corporation would otherwise have received.
Record it. The securities register under section 141 shows each holder, the number and class of shares, and the date and particulars of the issue. The issue is approved by directors’ resolution and kept in the minute book.
Update the significant control register. Related family members’ holdings are added together for the register, as explained below.
Put the agreements in place. A shareholders’ agreement, and where the family member is married, attention to their marriage contract, protect the company if relationships change.

Ways a family member can take part, and the main legal points
Role	Main legal points	Rule
Shareholder	Shares issued by the directors, fully paid; recorded in the securities register; rights set by the share class	OBCA ss. 23, 141
Director	Must be 18 or older, an individual, not found incapable, not bankrupt; owes the directors’ duties	OBCA ss. 118, 134
Beneficiary of a family trust holding shares	The trustees usually hold the shares and must meet the Trustee Act standards when investing	Trustee Act s. 27; OBCA s. 141
Related person for the significant control register	A spouse, son or daughter, or a relative in the same house is grouped; together at 25% or more, each is listed	OBCA s. 140.2; Ontario.ca guidance
Married shareholder	Shares can be part of net family property on separation or death, unless excluded	Family Law Act ss. 4, 52

What changes the answer

Children under 18

A minor cannot be a director: section 118(1) of the OBCA disqualifies anyone under 18. Ownership for children is often arranged through a trust instead, so that adult trustees hold the shares and make decisions until the children are older. Ontario’s estate planning guidance notes that trusts can hold property for people under 18, and the trustees must meet the prudent investor standard in section 27 of the Trustee Act when they invest trust property. Our page on trusts explains how trusts are set up and managed.

The significant control register

Ontario’s guidance explains that if a group of related persons collectively controls at least 25% of the shares, each person is an individual with significant control, and that related persons include a spouse, a son or daughter, and any other relative living in the same house. Bringing a spouse and children in can therefore add several names to the register even when each holds a small percentage. See the register of individuals with significant control.

Family law on separation or death

Under Ontario’s Family Law Act, “property” includes any interest, present or future, in real or personal property, so shares a married spouse owns generally count in their net family property. Section 4(2) excludes some property, including property acquired by gift or inheritance from a third person after the marriage, and property the spouses agree in a domestic contract is not to be included. Section 52 lets spouses, or people who intend to marry, make a marriage contract about ownership and division of property. Where a child is given shares as a gift, or a family member marries, these rules are worth discussing before the shares are issued.

A shareholders’ agreement

Family companies often skip a shareholders’ agreement because everyone trusts each other. The agreement is what decides what happens to a family member’s shares if they leave, divorce, die or simply want out, and who gets to buy them. Our page on shareholders’ agreements covers the clauses. The exit mechanics are in buy-sell clauses.

Directors’ duties apply to relatives too

A spouse or adult child who joins the board takes on the same duties as any director, including the duty to act in the corporation’s best interests and potential personal liability for unpaid wages. We explain these in directors’ duties under the OBCA.

What to settle before any shares are issued

Most problems in family companies come from decisions that were never written down. Before the directors issue a single share to a relative, it helps to agree on a handful of points and record them. Will the family member vote, or hold non-voting shares? Can they be required to sell their shares back if they leave the business, and at what price? What happens to their shares if they separate from their spouse, or die? Who decides on dividends? And who will run the company if the owner becomes ill?

The answers belong in three places: the articles (which set the share classes and their rights), a shareholders’ agreement (which deals with exits, buyouts and decisions), and each owner’s will and powers of attorney (which deal with death and incapacity). When all three are prepared together, they point the same way. When they are prepared years apart by different advisers, they often contradict each other, and the family discovers the conflict at the worst possible moment.

Example

For example, imagine Kevin owns all 100 common shares of a Richmond Hill manufacturing company. He wants his wife Ana and their two adult children to share in the company’s growth, and his accountant has suggested a structure for them. On the legal side, the company files articles of amendment creating a new class of shares, the directors issue those shares by resolution to Ana and the children, each paying the subscription price in money, and the securities register records each issue.

Because Ana and the children are Kevin’s related persons, the significant control register lists all four of them. Kevin and Ana review their marriage contract position with their own advisers. And the four sign a shareholders’ agreement that says what happens to a child’s shares if the child divorces, leaves the business or dies, so that the shares stay in the family company. Kevin also updates his will and powers of attorney so they match the new structure.

Common mistakes

Shares “given” but never issued. Without a directors’ resolution, payment and a register entry, the family member may not own what everyone thinks.
Naming a minor as a director. Section 118(1) does not allow it.
No shareholders’ agreement. A divorce or a death can put shares in hands the family did not intend.
Forgetting the significant control register. Related persons’ holdings are grouped.
Ignoring family law. Shares can form part of net family property unless excluded.
Changing the shares without changing the will. The estate plan should be reviewed at the same time.

What to do this week

Write down who should hold what, and why, and share it with your accountant.
Check your articles: do the share classes you need exist?
Decide whether any children should hold shares through a trust.
Check whether a shareholders’ agreement exists, and whether it covers family exits.
Note who in the family is married and whether a marriage contract is in place.
Book a review of the company documents and your estate plan together. A first consultation takes 30 minutes, by video or in person, and you can request one here.

Frequently asked questions

Can my teenager own shares in my company?

The OBCA bars minors from being directors (section 118(1)), and many families arrange a minor’s ownership through a trust with adult trustees. How to structure it is a legal and tax question to settle with your lawyer and accountant.

Do family members have to pay for their shares?

Section 23(3) of the OBCA says a share cannot be issued until it is fully paid in money, property or past services worth at least what the corporation would have received in money. The amount is set by the directors.

Does my spouse automatically own part of my company?

No. Ownership follows the securities register. On separation or death, though, the value of shares you own can count in your net family property under the Family Law Act, unless excluded.

Can I give shares to my children as a gift?

Shares you already own can be transferred, subject to the restrictions in your articles and any shareholders’ agreement, and recorded in the register. Tax consequences should be checked with your accountant first.

Do relatives on the register get to see the company’s records?

Shareholders can examine most of the records under section 145 of the OBCA, but not the register of individuals with significant control.

Should my estate plan change too?

Usually, yes. Our guide to estate planning for owners of an Ontario corporation explains how wills, powers of attorney and company documents fit together.

Sources

This page is general information about Ontario law, not legal advice for your situation. It reflects the law as of October 26, 2026.

Bringing family members into your company: shares, trusts and agreements