Does buying just enough shares for control change my exposure?

Buying shares gets you the corporation, not a slice of its assets, and stopping at control does not change that. The company keeps its history, including debts, claims and tax or payroll problems, and you now own it. What differs from buying every share is who else is still on the register, and whether your stake counts as control for rules that care about it. Both are worth settling before you pick a percentage.

Liability for the company’s debts

The Canada Business Corporations Act says shares issued by a corporation are non-assessable and that their holders are not liable to the corporation or its creditors in respect of them (s.25(2)). That is a rule about the shares. It does not stop a creditor from pursuing the company, whose value you now hold, and it does not cover what you sign personally. Provincial corporate statutes, such as Ontario’s, govern corporations formed under them, so check which statute applies.

Shareholders who stay

Under the federal Act, a complainant, which includes a holder of a security, can ask a court for an order where the corporation’s affairs are carried on in a manner that is oppressive or unfairly prejudicial to, or unfairly disregards, the interests of any security holder, creditor, director or officer (s.241). The court may make any order it thinks fit. Holders of a class of shares can also dissent and demand fair value on listed resolutions, such as a sale of all or substantially all of the property (s.190). Ontario’s statute has its own oppression remedy in s.248. Read any shareholder agreement before treating a stake as enough.

Control as a regulatory trigger

The Competition Act defines a merger as acquiring control over, or a significant interest in, the whole or part of a business of a competitor, supplier, customer or other person (s.91), so a stake short of control can fall within it. If the buyer is not a Canadian, the Investment Canada Act treats acquiring a majority of the voting shares as acquiring control, presumes that a smaller stake at or above a set level is control unless shown otherwise, and deems a stake below that level not to be (s.28(3), subject to other subsections). Ask a lawyer whether either Act applies before the stake is fixed.