I would like to inquire if private businesses can loan money…

You are unlikely to be able to do that since in order to be exempt from a prospectus, a private company must have restrictions in terms of transferring/selling shares.  That is, even in the event of default of the loan, the shares cannot be transferred to you.

the transfer of shares etc. is not up to the shareholder, but rather it is up to the corporation to set the rules and by-laws.

Again, unlikely, since the corporation owes zero obligations to you.  Your agreement with the shareholder does not bind the corporation

Forget about the legality of it for one second, and think about the practicality. Corporations are not obligated to pay dividends, so even if you were permitted to somehow receive dividends you may not get it until x number of years down the road

You cannot seize their corporate shares - this is strictly and solely controlled by the corporation

They're only two ways to obtain shares from a private company one, purchase it from the shareholder if the corporation allows it or two, purchase it from the corporation directly. Under the corporations act Ontario there must be consideration exchanged

Lending money to a shareholder is not consideration for the shares

Nope

Again, a private corporation has restrictions on sale and transfer of shares, usually with either approval of the directors or shareholders unanimously

You also may be in violation of some rules under the income tax act unless your corporation is in the business of lending money

The loan thing I'd have to look up

"can private corporations not in the business of lending money loan to individuals?" -I'd have to look this up, but for the time being, my gut feeling is no

essentially what you're asking is whether a private corporation shareholder pledge their shares under a GSA

for the most part, all of that is governed by the corporation and what its restrictions are on the sale and transfer of shares.  The information would be contained in their articles of incorporation, by-laws, shareholders agreement (if there is one), and the Ontario Business Corporations Act

on your end, your corporation lending money might run afoul of the Income Tax Act if that is not its regular course of business - but like I said, I'd have to check that.

"Ah I see, a limited company in the pet food business would most likely not have such rights right?" - yaaaaa probably not

I would highly recommend sitting down with a lawyer to discuss and further explore your options.  You can provide me your email if you wish to retain our firm (the lawyers here don't work for JustAnswer), or you can review Ontario's law society suggestions on how to find a lawyer. There is a free 30 minute consultation through the law society referral service:

https://lso.ca/public-resources/finding-a-lawyer-or-paralegal/law-society-referral-service

If you have financial difficulties, you might also see if you qualify for legal aid: https://www.legalaid.on.ca/

Or you can check on a site called lexpert. This is a legal directory of leading lawyers and law firms throughout Canada and is well-respected by the legal community.

Here's the link to their website:

http://www.lexpert.ca/directory/find-lawyers-or-law-firms/

Basically with shares, it depends on that (borrower) shareholders corporation, and the relevant laws. :)

You're very welcome. I hope I was able to assist you today.  This question will now be marked as complete.