Remaining Amendments to the Alberta Companies Act Now in Effect

On March 29, 2021, certain sections of the Red Tape Reduction Implementation Act, 2020 amending the Companies Act were proclaimed into force (please refer to our blog on those changes). The remaining sections of the Red Tape Reduction Implementation Act, 2020, that amend the Companies Act, have been proclaimed into force as of June 1, 2021.

Does this affect your nonprofit organization?

There are more than 4,500 Part 9 Companies operating in Alberta incorporated as companies with objects other than the acquisition of profit. To find out if your organization was incorporated under the Companies Act, check the Alberta Non-Profit Listing, or seek the services of an Alberta Corporate Registries agent. It is also important to know if your organization is incorporated as a Private Company or a Public Company under Part 9 of this Act as the amendments have different implications, mainly for reporting purposes.

What has changed?    

The amendments that are now in effect include (but are not limited to) changes designed to make annual reporting less onerous, eliminating the requirement for Court approval of certain actions, and deleting other redundant provisions that never had practical application to Part 9 Companies.  

Financial Statements  

Amendments to section 136 of the Companies Act change what is required to be included in a company’s financial statements. A financial statement or comparative financial statement will now need to include:  

  • A balance sheet;
  • A statement of retained earnings;
  • An income statement; and,
  • A statement of changes in financial position.  

The statements need to be drawn up in accordance with generally accepted accounting principles. Although the audit requirements in the Act have not substantially changed, the amended provisions explicitly state that the statements do not need to be prepared by a Chartered Professional Accountant of Alberta.   A

fter the financial statements have been approved by the board of directors, a public company will need to circulate them to all shareholders/members at least 21 days before the annual general meeting (this was previously 10 days).

Annual Returns

Amendments to section 162 of the Companies Act change what needs to be included with an annual return:  

  • Private companies no longer need to file a list of members;
  • The annual return needs to include notices with respect to any change in location of the registered address and any changes among the directors of the company (if not previously filed with the Registrar);
  • Companies with share capital need to file a list of all the shareholders of the company and the percentage of voting shares assigned to each shareholder; and,
  • The annual return for a public company needs to include a copy of the financial statements and auditor’s report that was presented at the last annual general meeting.  

Processes to Make Fundamental Changes  

Previously, if the directors or members of a company wanted to make certain fundamental changes to the company Court approval was required.

Certain amendments to the Act eliminate the need to obtain Court approval to:  

  • Alter the objects of a company (s. 34);
  • Re-organize the share capital of a company (s. 38); and,
  • Amalgamate with another company (s. 172).  

Elimination of Redundant Provisions and Other Updates  

  • Since this Act was used to incorporate for-profit companies prior to 1982, there were still many provisions that had limited or no application to nonprofit companies. The recently proclaimed amendments eliminate many of these redundant provisions, including, but not limited to:  
  • Provisions granting companies the power to sell shares, debentures, and securities;
  • Provisions dealing with share warrants; Insider trading provisions;
  • Provisions applicable to companies in the business of investing mutual funds; Provisions related the payment of dividends;
  • Provisions related to issuing a prospectus for publicly traded companies; and, Provisions relating to the return of accumulated profits.  

Miscellaneous Changes  

Other miscellaneous changes to the Act include, but are not limited to:  

Updated requirements as to what needs to be included in Memorandum of Association when forming a private company (s. 15);

  • Updated requirements for what an auditor’s report needs to include (s. 133);
  • Updated requirements for the appointment of proxies (s. 155);
  • Updated requirements for removing companies in default from the Registrar (s. 205);
  • Eliminated provisions related to “specially limited companies”;
  • A company that had members outside of Alberta is no longer required to give the Alberta Registrar notice of a registry of members in another jurisdiction (s. 73);
  • Companies no longer need to keep a register of managers at their registered office (s. 93); and,
  • The Registrar can no longer be able to relieve a company of the requirement to hold an AGM (s. 149).  

 

For further information on all the amendments to the Companies Act, please review section 2 of the Red Tape Reduction Implementation Act, 2020, in detail.   If you have any questions with respect to this article or the changes to the Companies Act, or if you require assistance complying with any of the amended provisions, please do not hesitate to contact the team at IntegralOrg.

Kristina Roberts is a lawyer with experience in public interest matters and social entrepreneurship. At IntegralOrg, Kristina is responsible for developing a toolkit to assist organizations and entrepreneurs with structuring social enterprises, as well as overseeing and assisting with various other legal initiatives relevant to the charitable and nonprofit sector and the organizations that IntegralOrg works with.   

Yvonne Chenier, QC, is a lawyer and philanthropy consultant –Yvonne brings more than 35 years of experience helping those in the philanthropic, nonprofit, and social enterprise sectors as general legal counsel and as an advisor on planning, organizational, regulatory and governance matters.