The Business Corporations Amendment Act, 2021 came into force on May 31, 2022 and has the goal of modernizing business legislation and reducing red tape for Alberta businesses to attract innovators, entrepreneurs, and job-creators. In general, these amendments do 8 things to Alberta’s Business Corporations Act (ABCA):
(1) Clarifies Directors’ and Officers’ Roles and Expands Opportunities for Them
(2) Provides Creditors with Increased Protections
(3) Increases the Revival Timeframes
(4) Expands Shareholders’ Protections While Acting as Directors Under a Unanimous Shareholder Agreement (“USA”)
(5) Decreases Shareholder Approval Thresholds in Two Situations
(6) Increases the Court’s Discretion When Considering Plans of Arrangement
(7) Streamlining Administrative Processes
(8) Modernizes the ABCA
(1) Clarifies Directors’ and Officers’ Roles and Expands Opportunities for Them
These amendments allow directors and officers to vote on agreements in which they may have a material interest but where the interest would benefit the corporation; previously, they were not allowed to vote on such agreements. The amendments also allow corporations to waive any interest in business opportunities offered or presented to its officers, directors, or shareholders. This allows officers, directors, and shareholders more flexibility in running multiple corporations at once. Finally, directors now have access to a broadened good faith defence in relying on others’ opinions.
(2) Provides Creditors with Increased Protections
These amendments now require shareholders to return improperly disbursed money or property when ordered by a court. This provides creditors with another avenue of recourse when a corporation improperly disburses money or property.
(3) Increases the Revival Timeframes
The deadline for reviving a dissolved corporation is now extended to 10 years from an original 5 years. There are no longer revival deadlines for societies, cooperations, and companies under the Societies Act, the Cooperatives Act, and the Companies Act respectively.
(4) Expands Shareholders’ Protections While Acting as Directors Under a Unanimous Shareholder Agreement (“USA”)
Shareholders party to a USA can now use any defences available to directors when exercising the power of a director under a USA. This means that shareholders can fetter their discretion by relying in good faith on others’ advice.
(5) Decreases Shareholder Approval Thresholds in Two Situations
For privately held, non-reporting issuer corporations, only 2/3 shareholder approval is now needed for: (i) waiving the requirement of audited financial statements and (ii) passing a written and signed resolution instead of a shareholder meeting.
(6) Increases the Court’s Discretion When Considering Plans of Arrangement
Previously, the courts were required to make certain orders and had the discretion to make other orders upon the application for court-approved a plan of arrangement. Now, the court can make “any interim or final order it thinks fit.” The cumulative effect of these amendments means smoother, more contextual processes for each plan of arrangement instead of requiring steps even if they are unnecessary.
(7) Streamlining Administrative Processes
The ABCA now has much fewer specific administrative requirements for the governance of a corporation. From removing specific publication requirements to removing requirements for alphabetization of shareholder lists, corporations are now provided with more discretion to administer their processes according to their own preferences.
(8) Modernizes the ABCA
Overwhelmingly, a lot of the amendments to the ABCA were revising sections for clarity, consistency, or concision; removing requirements for faxed, handwritten, or physical documents; unifying terminology across other legislation; removing references to repealed legislation; and allowing electronic means of communication and voting.
We at Bishop & McKenzie LLP have a capable team that would be happy to assist you with these matters, and with answering any other questions that you may have with respect to how your corporation may be affected by or can utilize these amendments