In appearance, the law of stock splits varies wildly from jurisdiction to jurisdiction, but it moves in fact, with a certain lag across jurisdictions, in the same direction as corporate capital rules. The table that follows provides an overview of the legal treatment of stock splits under the continent’s major corporate laws plus the UK (to exemplify the effective regulation of stock splits as part of a system of capital rules).
| Jurisdiction | Share capital – Limited/Unlimited | Par Value | Stock Issuance | Subdivisions (Forward Splits) | Consolidations (Reverse Splits) |
| MBCA | Limited, fixed in certificate of incorporation 1 | Optional2 | Board of directors3 | Board of directors, unless the corporation has more than 1 class of shares outstanding4 | Amendment to the articles of incorporation5 |
| Delaware | Limited, fixed in certificate of incorporation6 | Optional, in practice always par value | Board of directors7 | Amendment to certificate of incorporation8 | Same as subdivision9 |
| California | Limited, fixed in certificate of incorporation10 | No | Board of directors | Amendment to the articles. However, if only 1 class of shares is outstanding, the amendment is adopted by the board11 | Amendment to the articles |
| Canada | Optional, unlimited is default | No12 | Board of Directors | Amendment to articles. Requires resolution adopted by 2/3 of votes cast by shareholders13 | Same as subdivision |
| Alberta | Optional, unlimited is default | No14 | Board of directors15 | • Where only 1 class of shares issued, either Board of directors or Amendment to articles 16; • If more than 1 class of shares issued, shareholders class vote by special resolution17 | Same as subdivision. |
| British Columbia | Optional18 | Optional19 | Board of directors20 | • If shares have par value, the subdivision is effected by an alteration to the notice of articles. The alteration to the notice of articles is authorized by the type of resolution specified in the articles or, if the articles do not specify the type of resolution, by a special resolution21. • If shares do not have par value, the subdivision is authorized by the type of resolution specified in the articles or, if the articles do not specify the type of resolution, by a special resolution22 | Same as subdivision: • Par value shares23; • No par value shares24. |
| Ontario | Optional, unlimited is default25 | No26 | Board of Directors27 | Amendment to articles. Requires resolution adopted by 2/3 of votes cast by shareholders28 | Same as subdivision |
| Québec New | Optional, unlimited is default29 | Optional, no par value is default30 | Board of Directors31 | Board of directors, except: • Squeeze-out transactions32; • If more than 1 class of shares issued and splitting affects rights of class33; • requires amendment to articles to reduce par value34. | Same as subdivision |
| Quebec Old | Optional, unlimited is default35 | Optional, no par value is default36 | Board of Directors | Board, unless requires amendment to articles to reduce par value37 | Same as subdivision |
| Saskatchewan | Optional, unlimited is default38 | No39 | Board of Directors40 | Special resolution adopted by shareholders; no need for amendment to articles41. | Same as subdivision |
| UK | Unlimited. However, in a private company with more than 1 class of shares and public companies, directors can only issue shares up to amount authorized from time to time by shareholders. | Yes42 | • Private company with 1 class of shares: Directors43; • Private company with more than 1 class of shares and public companies: directors if prior authorization44; • Subject to statutory right of preemption45. | Conditional on shareholders’ prior authorization46 | Same as subdivision |
[1] MBCA, § 2.02(a)(2).↩
[2] MBCA, § 2.02(b)(2)(iv).↩
[3] MBCA, §6.21.↩
[4] MBCA, §10.05(4)(a).↩
[5] MBCA, §10.04(a)(4).↩
[6] DGCL, § 102(a)(4).↩
[7] DGCL, § 161.↩
[8] DGCL, §242(a)(3); 242(b).↩
[9] DGCL, §242(a)(3); 242(b).↩
[10] CALIFORNIA CORPORATIONS CODE, 202(d), (e).↩
[11] CALIFORNIA CORPORATIONS CODE, 902 (c), 903(a)(2).↩
[12] CBCA, 24(1).↩
[13] CBCA, 173(1)(h).↩
[14] ABCA, 26(1).↩
[15] ABCA, 27(1).↩
[16] ABCA, 27.1(1).↩
[17] ABCA, 27.1(2).↩
[18] BCBCA, 53(b).↩
[19] BCBCA, 52(2)(a)(i).↩
[20] BCBCA, 62v.↩
[21] BCBA, par value in notice of articles: s.11(g) and 53(c); alteration to notice of articles: s. 54(1)(e) and s. 54(3)(a); procedure to alter notice of articles 257(2)(b).↩
[22] BCBA, subdivision of shares without par value: 54(1)(f); procedure to effect change: 54(3)(c).↩
[23] BCBA, par value in notice of articles: s.11(g) and 53(c); alteration to notice of articles: s. 54(1)(g) and s. 54(3)(a); procedure to alter notice of articles.↩
[24] BCBA, consolidation of shares without par value: 54(1)(h); procedure to effect change: 54(3)(c).↩
[25] OBCA, 5(1).↩
[26] OBCA, 22(1).↩
[27] OBCA, 23(1).↩
[28] OBCA, 168(1)(h).↩
[29] LSAQ, 43.↩
[30] Ibid.↩
[31] LSAQ, 52.↩
[32] LSAQ, 90(1).↩
[33] LSAQ, 90(2).↩
[34] LSAQ, 92.↩
[35] LCQ, 123.12(4).↩
[36] LCQ, 123.12(5).↩
[37] LCQ, 123.101, 123.103.↩
[38] SBCA, 6(1).↩
[39] SBCA, 24(1).↩
[40] SBCA, 28(1).↩
[41] SBCA, 25(1).↩
[42] CA 2006, s 542(1).↩
[43] CA 2006, s 550(a).↩
[44] CA 2006, s 551.↩
[45] CA 2006, s 561.↩
[46] CA 2006, s 618.↩
