Open for Business: New Amendments Ease Corporate Restrictions in Alberta
In an effort to attract national and international investment and business, the Province of Alberta has made amendments to legislation that ease requirements and restrictions on the formation and operation of corporations in Alberta.
These changes arise from the recently passed Bill 22 and Bill 53, which are omnibus legislation that amend, among other things, the Business Corporation Act.
Two notable changes resulting from Bill 22 and Bill 53 are:
- removal of the Canadian residency requirement for directors; and
- permitting virtual shareholder and director meetings.
Previously, Alberta corporations required at least 25% of their directors be Canadian residents. This residency requirement was an unnecessary obstacle for foreign investment in Alberta, forcing many to choose jurisdictions with less legislative requirements, such as British Columbia.
Bill 22 has removed the Canadian residency requirement, a change that is retroactive to August 15, 2020. Alberta corporations are now free to appoint directors based on their value and merit, as opposed to their residency.
This change aligns Alberta with jurisdictions that do not have a Canadian residency requirement for directors, namely British Columbia, Quebec, Prince Edward Island, Nova Scotia, New Brunswick, Yukon, Northwest Territories and Nunavut.
The change also creates an advantage over provinces where the 25% Canadian residency requirement still exists, such as Ontario, Saskatchewan, Manitoba, and Newfoundland.
For thoughts on the impact removing Canadian directors could have on your company’s tax jurisdiction and its resulting domestic and international tax liability, see our colleagues’ article here.
In addition to the change outlined above, Bill 53 allows corporations to now conduct directors’ and shareholders’ meetings virtually, a change that is also retroactive to August 15, 2020. This is welcome news for many corporations that have struggled to conduct in-person directors’ and shareholders’ meetings in light of COVID-19.
Further to being able to conduct meetings virtually, directors and shareholders can also vote on matters virtually.
To take advantage of this change, a corporation will need to make sure its bylaws, articles, or other governing documents (such as a Unanimous Shareholders’ Agreement) do not prohibit meetings and voting by electronic means.
Similar changes also apply to non-profits, societies, cooperatives, and condominium corporations. As with business corporations, these organizations must also ensure their governing documents do not prohibit meetings and voting by electronic means.