In November 2021, Bill 84: Business Corporations Amendment Act, 2021 had its first reading, and it received royal assent just a few weeks later. The bill was introduced with the goal of strengthening Alberta’s economy by attracting more investment to the province, with the promise of reducing “red tape” and other administrative requirements for those who choose to do business in Alberta.
In a press release issued in November 2021, the Minister of Service Alberta said the following about the incoming changes:
There are many advantages to investing in Alberta and we’re continuing to build on that strong foundation. When innovators, entrepreneurs and job creators are looking to incorporate, invest, and grow their business, we want to be at the top of their list. These changes will help solidify our position at the top.
The changes under the Act have not yet come into force but are expected to take effect in the first half of this year. With that in mind, below we will provide an overview of the upcoming changes so that new and existing businesses can properly prepare.
Key Changes Under Bill 84: Business Corporations Amendment Act, 2021
Clarify Director’s Responsibilities and Protections
Many of the changes proposed under Bill 84 impact corporate directors. Highlights include:
Currently, directors face several restrictions when it comes to voting on contracts or transactions in which they have a personal interest. While this will remain the case after Bill 84 comes into effect, these circumstances will be expanded. Presently, directors must disclose any interest they have in contracts or transactions facing a vote, and abstain from voting in those situations, with certain limited exceptions. Under Bill 84, these exceptions will be expanded to include situations in which the director’s interest is for the benefit of the corporation. For example, if the director is guaranteeing a loan to the corporation in their capacity.
Under the current Act, directors must undertake comprehensive due diligence and seek the counsel of outside experts when acting on behalf of the corporation to have the right to later enact a defence of good faith. Bill 84 will enable directors to take advice from a greater pool, including employees of the corporation, so long as the employee(s) role or experience provides credibility to any opinion or advice they may provide.
Currently, a director can obtain liability insurance for their actions except in circumstances where they fail to act in good faith or in the best interests of the corporation. Under Bill 84, directors are statutorily permitted to maintain liability coverage for actions, even if they failed to act with honesty, good faith, or in the corporation’s best interests.
Expand Corporate Opportunities for Directors and Officers
Corporate Opportunity Waivers: Currently, directors are prohibited from participating in business opportunities that they become aware of as a result of their position as a fiduciary to a corporation. In other words, if an opportunity is available to the corporation, the director may not also participate independently, as this could be seen as a breach of fiduciary duty. However, Bill 84 contemplates allowing corporations to include the ability to waive the right to certain opportunities, which would in turn enable the director(s) to participate.
Expand the Timeframe for Reviving a Dissolved Corporation
Under the current Business Corporations Act, the time in which a dissolved corporation can be revived is five years from the date of dissolution. Under Bill 84, that period will be doubled to ten years. This will grant greater flexibility for interested parties to manage or resume business activities in the name of the corporation. The Bill also will allow an indefinite timeframe for reviving a non-profit entity.
Simplify the Approvals Process
At present, shareholder resolutions require a unanimous vote to pass. Bill 84 will reduce the threshold to a two-thirds majority in the following circumstances:
- Resolutions to waive the requirement for audited financial statements for privately held, non-distributing corporations, and
- When passing a written shareholder’s resolution in place of holding a shareholder’s meeting.
Better Align Alberta’s Business Legislation with Federal and Ontario Legislation
Changes under Bill 84 will follow federal and Ontario legislation in allowing shareholders acting as corporate directors to “fetter their discretion” when making decisions on behalf of the corporation, by consulting with others.
Modernize and Remove Redundancies
Bill 84 aims to bring the Business Corporations Act into the modern age by making the following changes:
- Take modern communication tools into account in the language of the Act, and by removing requirements for faxed or handwritten communications;
- Remove administrative redundancies; and
- Allow greater flexibility overall for shareholders and directors in their decision-making processes.
Contact the Business Lawyers at DBH Law in Calgary: We Think Law. We Talk Business.
For over 25 years, the lawyers and staff of DBH Law have built strong client relationships and provided our business and corporate clients with the responsive and concise legal advice they can trust. We take a pragmatic approach to the law and give our clients practical and proactive solutions tailored to their specific needs. If you have questions about how the upcoming changes could impact your business, we can help.
For those looking to incorporate in Alberta, we look forward to hearing about your new business, guiding you through what needs to be done, identifying risk and advising on how you can manage it, and helping you navigate those first crucial stages of growth. With over 25 years of experience advising entrepreneurs and business owners, DBH Law has learned to provide personalized, professional services while consistently achieving results. Contact us online or by phone at 403.252.9937 to discover how we can help you today.