Does owning less than 50% of the shares in a regulated business mean an investor doesn't control it?

Two separate tests, not one

The Drug and Pharmacies Regulation Act sets a director test and a share test as two distinct subsections of the same section, and both must be satisfied. s.142(1): “No corporation shall own or operate a pharmacy unless the majority of the directors of the corporation are pharmacists.” s.142(2): “No corporation shall own or operate a pharmacy unless a majority of each class of shares of the corporation is owned by and registered in the name of pharmacists or in the name of health profession corporations each of which holds a valid certificate of authorization issued by the College.” DPRA s.142(1)-(2) An investor who negotiated a majority of the board but stayed under the share test's threshold still fails s.142(1) — the share position clearing one test does not clear the other.

Why the share test runs class by class

Because s.142(2) is written “a majority of EACH class of shares,” taking a non-voting preferred class on the theory that only voting shares determine control does not satisfy it — the pharmacist-majority requirement applies to that non-voting class in its own right, independently of what the voting class looks like. A structure built around the ordinary corporate-law assumption that non-voting shares don't carry control can fail a sector-specific ownership test that was never written around voting rights in the first place.

Where it changes: the professional-corporation rule is a different statute

The OBCA's own professional-corporation provision, s.3.2(2), imposes a comparable ownership restriction for professional corporations generally — but it is a different statute from the DPRA, with its own threshold and its own exceptions (including one added by 2025 legislation, s.142(6), effective 1 January 2026). Confirming which regime governs a given regulated target, rather than assuming a professional-corporation rule of thumb applies uniformly, is the first step, not an afterthought.

Where This Plays Out in the Case Files

• • Three of five board seats in a pharmacy corporation — an investor whose shareholding cleared the statutory majority test but whose negotiated board control did not.
• • Forty-nine per cent of every class, and not a share more — a fund that planned to take a non-voting preferred class on the view that votes were what mattered — and found the test runs class by class.

Sources

• • Drug and Pharmacies Regulation Act, R.S.O. 1990, c. H.4 — s.142(1) (director test), s.142(2) (share test, per class), s.142(4)-(5) (exceptions), s.142(6) (added by 2025, c. 11, Sched. 3, s. 3, in force 1 January 2026).
• • Business Corporations Act (Ontario), R.S.O. 1990, c. B.16, s.3.2(2) — the general professional-corporation ownership rule, a different statute from the pharmacy-specific test above.
• • Treadstone Law — can shareholders instruct directors in Ontario — the general Ontario corporate position; it is written for unregulated corporations and does not address DPRA s.142.