Cumulative voting (CBCA s. 107)

Section 107 of the Canada Business Corporations Act applies where the articles provide for cumulative voting. A minority shareholder looking for a board seat before a sale may meet it, because it lets votes be concentrated on one candidate.

How section 107 works

The articles must require a fixed number of directors, not a minimum and maximum. Each shareholder entitled to vote may cast the votes attached to the shares held, multiplied by the number of directors to be elected, for one candidate or spread among candidates. A separate vote is taken on each candidate unless a resolution is passed unanimously permitting two or more persons to be elected by a single resolution. Section 107 also sets its own test for removing a director. Corporations Canada’s instructions for Form 9, the articles of amalgamation, give suggested, non-mandatory wording for a cumulative voting provision. See oppression remedy for minority shareholders.

What to check

• Whether the articles provide for cumulative voting at all.
• Whether the articles fix the number of directors.
• How the removal test in section 107 applies before a board change.