The New BC Corporations Act
(continued)14.
Financial Assitance
Under the Act, a company can provide financial assistance to any person,
for any reason, through loans, guarantees, etc. But, when the company
provides material financial assistance to certain categories of
individuals (such as shareholder, directors, officers, etc.) or for the
purpose of buying the company’s shares, the assistance must be disclosed.
15. Financial Statements and auditors
Under the new Act, all voting and non-voting shareholders can unanimously
agree to waive the production of financial statements and appointment of
an auditor.
16. Annual General Meetings (“AGM”)
The new act allows for all voting shareholders to unanimously waive the
holding of an AGM. Also, the Act allows an AGM to be held outside of BC,
if such locations is provided for in the articles or approved by an
ordinary resolution before a meeting. It is important to note that
meetings can be held via telephone, teleconferencing and internet
chartrooms or other medium, so long as all participants can communicate
with each other.
17. Notice
Notice period for private company AGMs can now be anywhere from 10 to 21
days. For public companies, the notice period is 21 days.
18. Proposals
The Act introduces the new topic of proposals. Shareholders, meeting
certain requirements, can submit a notice setting out a matter to be
discussed in the next AGM and the company is obligated to address the
proposal.
19. Amalgamations
These procedures have been simplified. In most instances, the requirement
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approval no longer stands. Also subsidiaries
can now amalgamate with their parents or other subsidiaries without
amalgamation agreements. In certain instances a company can amalgamate
with a company outside of BC without first continuing the companies into
one jurisdiction.
20. Dissolution and Liquidation
Short-form dissolutions are allowed in the Act without the company needing
to eliminate liabilities, so long as adequate provisions are made for the
liabilities.
21. Restoration
Restorations can now be done by the Registrar and without a court
application, unless there is a claim to recover escheated land where the
company has been dissolved over two years. Also, there are no longer any
restrictions as to time limit on restorations, i.e. the 10 year limit
under the old Company Act has been removed.
22. Extraprovincial Companies
The Act lifts the restriction on the powers of extraprovincial companies
that are not registered in BC. An extraprovincial company need not be
registered any longer in order to maintain a claim or to hold interest in
land.Transition Steps
Pre-existing companies have until March 29, 2006 (two years from the
effective date of the Act) to adopt the new rules. If not, the Registrar
can dissolve non-complying companies. To adopt the new rules, each
pre-existing company must do the following:
- Authorize the transition application and the
changes to the Articles (mandatory changes and/or optional changes) with
either a directors’ resolution or an ordinary shareholder resolution;
-
Adopt a Notice of Articles
in place of the memorandum;
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Change its Articles to
comply with the Act. There are mandatory changes, such as adding the
text of rights and restrictions on shares to your Articles and also
adding the incorporation number of your company, and other changes which
are optional (we will be happy to discuss these changes with you in
detail);
-
Replace the current share
register with a Central Securities Register;
-
Organize your company’s
records to comply with the Act; and
-
File a Transition
Application with the Registrar in the prescribed form.
It should be noted that
until steps 1-5 have been accomplished, a company cannot file a Transition
Application.
The above has been a short
summary of the changes affecting BC Companies as a result of the new Act.
Form more detailed analysis and discussion of the new Act, as it pertains
to your company, please contact our offices.
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