The Business Corporations ActBy Stéphanie Provost Lawyer, Marc D'Aoust, Alexandre Lebeau Lawyer
On February 14, the Business Corporations Act came into effect, superseding certain parts of the Companies Act. Below is an overview of some of the changes.
The board of directors must now take specific steps during organization meetings to establish the corporation. In the past, administrators could adopt general regulations for internal matters under section 91 of the Companies Act. However, from now on, boards will instead implement by-laws - the content of which is not specified in the new Act (section 113). Companies will therefore set out their own by-laws and structure their own affairs.
With these new changes, the share certificate adopted under the by-laws must be in the name of a shareholder (section 61 (1) and 63 (1)). It is no longer possible to emit a share warrant (i.e. a share that belongs to the person who holds the certificate). In addition, rights and restrictions texts and summaries of such texts are no longer required. It is now possible to indicate that rights and restrictions apply and that the details are available upon request (section 65 (1)).
Unanimous shareholder agreement
The existence of a corporation's unanimous shareholder agreement must be confirmed with the enterprise registrar (section 215). This type of agreement is implemented when all shareholders consent in writing to restrict or withdraw the powers of the board of directors in whole or in part (section 213) and benefits creditors, including government authorities, who may consult the document through the registrar (section 32). A unanimous shareholder agreement that excludes certain decisional acts is not unanimous within the meaning of the law.
Continuance or amalgamation
A corporation constituted under certain legislation may request that it be continued or amalgamated under the laws of another jurisdiction (section 297). This represents a significant change, since a corporation constituted under the Business Corporations Act can now change jurisdiction and be continued under the Canada Business Corporations Act.
The Act also outlines transitional provisions for corporations constituted prior to February 14, 2011, stipulating that companies constituted under Part IA of the Companies Act become business corporations governed by the Business Corporations Act as of February 14 (section 716 (1)).
A company constituted under Part I of the Companies Act must send articles of continuance to the enterprise registrar in accordance with the Business Corporations Act by February 14, 2016. Otherwise, it will be dissolved.