The new British Columbia Business Corporations Act (the "new Act") came into force March 29, 2004, replacing the British Columbia Company Act. The new Act retains many features of the current act but there are some required and optional changes in practice and procedure for British Columbia companies that arise from the new Act.
One requirement of the new Act is that every company currently governed by the existing act must complete the necessary transition steps under the new Act. The transition application must be filed within two years of the new Act coming into force. However, if you plan on making any changes to your current memorandum or articles, you must transition first. This application will include a notice of articles which will replace the memorandum. In addition, if your company has share rights or any restrictions on its businesses or powers in its memorandum, those provisions must be moved to its articles in order to comply with the new Act (the "Mandatory Changes"). The transition application and the Mandatory Changes must be authorized by either a directors' resolution or an ordinary shareholders' resolution.
In the case of a simple, one shareholder company, the transition application and Mandatory Changes may be all that is required. However, your company may want to make additional changes to its articles to allow it to take advantage of provisions in the new Act.
Please contact your DuMoulin Boskovich LLP lawyer to discuss any optional changes you may want to make to your company's articles.
Some of the key provisions of the new Act are as follows:
• no director residency requirement
• removal of mandatory president/secretary officer positions (and one person can act as both)
• directors will be able to shift power and responsibility, and hence liability, to other persons, including shareholders
• no court approval for director indemnities (with some exceptions)
• new provisions relating to conflict of interest and mandatory disclosure for directors
• no mandatory pre-emptive rights on allotment of shares
• par value and non-par value shares permitted
• fractional shares permitted
• reduction of capital may be done be special resolution, rather than just by court order
• subsidiary can acquire but not vote shares of parent
• company may hold shares of its own capital
• choice of special resolution majorities (2/3 or 3/4)
• concept of exceptional resolution introduced (greater than special majority)
• amalgamations may be effected with or without court approval
• amalgamations of a BC company with a foreign corporation possible
• short form and vertical amalgamations permitted
• no penalties for failure to extra-provincially register
• electronic filings mandatory
We repeat that your company must be transitioned by March 29, 2006. We will prepare the necessary documents for transition, the Mandatory Changes (if required) and the optional changes (if requested) in conjunction with the preparation of the next annual report for your company, unless we are instructed otherwise or believe that your circumstances may require an early transition. In many cases a company should not wait the full two-year period to transition, because until the company has been transitioned, it will not be able to alter its memorandum or articles (including the opportunity to adopt some of the optional changes to the articles afforded by the new Act). Please note that failure to transition within the two years is grounds for the Registrar to dissolve the company.
A full transition package will be sent to each British Columbia company for whom D & B Corporate Services is the registered and records office. |
