4 Impactful Changes Brought By Alberta's Business Corporations Act
On December 2, 2021, the Government of Alberta’s Bill 84: Business Corporations Amendment Act, 2021 received Royal Assent. What does this mean to business owners?
The amendments to the Business Corporations Act will help bring in more investments by making Alberta a more attractive jurisdiction to grow a business.
Bill 84 is a big step for the province of Alberta in that it allows more investment opportunities, more flexibility for business owners, as well as better protections for directors and investors. The changes took effect on January 1, 2022.
In this post, we will discuss several key changes that you need to be aware of:
1. Directors’ Responsibilities and Protections
A lot of the changes done in Bill 84 focus on the duties, responsibilities, and liabilities of the directors of corporations. They expand on the defences for directors when acting in good faith for the corporation and enhance its ability to indemnify its directors.
With these changes, directors will be able to vote on resolutions to approve material contracts or transactions in which they have disclosed an interest. Furthermore, the changes to subsection 122 of the Act clarifies the director’s duties are owed to the corporation.
Bill 84 also introduces changes to subsection 123(3) of the Act that employees of the corporation will be listed as the parties on whose opinions or reports a director may rely in good faith to be relieved for specific actions under Section 118 of the Act.
2. Revival After Dissolution
The new bill increases the timeline of how long a corporation may be revived by the Registrar, which is now ten years compared to five years before. Moreover, the extended timeline also applies to the applications by interested persons applying to revive a dissolves corporation under Section 210 of the ACT.
With this change, it will provide entities with more time to resume their business of dealing with assets or legal issues that may come up after dissolution.
3. Corporate Opportunity Waivers
A new subsection, 16.1, was added to Bill 84 to let corporations waive opportunities to participate in specific businesses or specified classes or categories of business offers to the corporation or its officers, shareholders or directors.
This amendment will be useful for private equity and Alberta investors who want to invest in multiple, similar businesses and have to deal with multiple boards.
With this change, Alberta becomes the first province to legislate corporate opportunity waivers.
4. Court Approved Arrangements
A change to the Act requires applicants under Section 193 to notify the Registrar of their application and gives the Registrar the right to be heard on the application.
Additionally, the changes also clarify the powers of the Court to make interim or final order it sees fit under this section, beyond the existing powers in subsection 193(4) of ordering meetings of shareholders or other rights holders.
The changes made to the Business Corporations Act in Bill 84 will help entrepreneurs run their corporations more smoothly and efficiently to promote economic growth in Alberta.
Do you need a business lawyer in Medicine Hat? Hamilton Cahoon can assist you in all legal matters. Book a consultation with us.