13 Feb 2016

Appointing Officers

by Holly Crosgrey | posted in: AB Business Corporations Act, BC Business Corporations Act, Canada Business Corporations Act, Directors Resolutions, General Corporate Law, Maintaining Your Company, MB Corporations Act, officers, Ontario Business Corporations Act, The Business Corporations Act (Saskatchewan) | 0

This article will provide guidance on how to appoint officers of a Corporation and how resignations and removal of officers are documented.

The directors of a corporation manage the affairs of the corporation. As part of that management the directors are responsible for appointing officers to assist them with their duties.

Directors can appoint officers at a meeting or a resolution can be signed by all of the directors appointing officers. For more guidance on preparing resolutions refer to directors resolutions. For guidelines on how directors can go about appointing officers at a meeting refer to directors meetings.

The statute of incorporation and the by-laws of a corporation will govern the manner in which officers can be appointed, removed or resign.

Appointing Officers

The directors initially approve the officers of the Corporation upon incorporation or each year at the annual meeting (see below for more information on annual resolutions/meetings).

An example of a resolution appointing officers is as follows:

2-Appointment-of-Officers

Resignation of Officers

When an officer wishes to discontinue working with a company, that person will resign as an officer from the position he or she is holding. See an example of a resignation of an officer below:

1-Resignation-of-Officer

Once a resignation has been received by the directors of a corporation, they will need to decide whether they wish to appoint another officer to replace the person resigning. Depending on the type of position, it may not be necessary to appoint a replacement. In situations where the directors wish to appoint a replacement officer, they will prepare a resolution in the form below:

3-DR-Resigning-Officer

Remove an Officer

The general operating by-law provides the manner in which an officer may be removed. The directors of a corporation will approve a resolution to remove the officer and appoint a replacement to that position. Below is an example of this form of resolution:

4-DR-Removing-an-Officer

Annual Resolutions

Each year a company must approve certain matters. Officers may be excluded from appointment and new ones brought on at this time without being removed or resigning. For more information these approvals see annual resolutions.

For more information about officers titles refer to Officers Titles.

Notice of Change

Most jurisdictions will provide in the governing statute that a notice of change must be filed to update the government’s database with respect to changes in officers and directors. In many cases this can be done online using a company that has access to the databases or a paper filing can be done. Paper filings are not as reliable but in most cases they are free to file.

Statute Reference:

Business Corporations Act (Ontario)

“1(1) “officer” means an officer designated under section 133 and includes the chair of the board of directors, a vice-chair of the board of directors, the president, a vice-president, the secretary, an assistant secretary, the treasurer, an assistant treasurer and the general manager of a corporation, and any other individual designated an officer of a corporation by by-law or by resolution of the directors or any other individual who performs functions for a corporation similar to those normally performed by an individual occupying any such office;

“senior officer” means,

(a) the chair of the board of directors, a vice-chair of the board of directors, the president, a vice-president, the secretary, the treasurer or the general manager of a corporation or any other individual who performs functions for a corporation similar to those normally performed by an individual occupying any such office, and

(b) each of the five highest paid employees of a corporation, including any individual referred to in clause (a);”

“117. (1) After incorporation, a meeting of the directors of a corporation shall be held at which the directors may,… (d) appoint officers;”

“127. (1) Subject to the articles or by-laws, directors of a corporation may appoint from their number a managing director or a committee of directors and delegate to such managing director or committee any of the powers of the directors. 2006, c. 34, Sched. B, s. 21 (1).”

Canada Business Corporations Act

“2(1) “officer” means an individual appointed as an officer under section 121, the chairperson of the board of directors, the president, a vice-president, the secretary, the treasurer, the comptroller, the general counsel, the general manager, a managing director, of a corporation, or any other individual who performs functions for a corporation similar to those normally performed by an individual occupying any of those offices;”

“104 (1) After issue of the certificate of incorporation, a meeting of the directors of the corporation shall be held at which the directors may…..(d) appoint officers;”

Business Corporations Act (Alberta)

“121. Subject to the articles, the bylaws or any unanimous shareholder agreement, (a) the directors may designate the offices of the corporation, appoint as officers individuals of full capacity, specify their duties and delegate to them powers to manage the business and affairs of the corporation, except powers to do anything referred to in section 115(3), (b) a director may be appointed to any office of the corporation, and (c) 2 or more offices of the corporation may be held by the same person.”

Business Corporations Act (British Columbia)

“141 (1) Subject to subsection (3) and to the memorandum and articles of a company, the directors may appoint officers and may specify their duties.

(2) Unless the memorandum or articles provide otherwise,

(a) any individual, including a director, may be appointed to any office of the company, and

(b) 2 or more offices of the company may be held by the same individual.

(3) An individual who is not qualified under section 124 to become or act as a director of a company is not qualified to become or act as an officer of the company.

(4) Unless the memorandum or articles provide otherwise, the directors may remove any officer.

(5) The removal of an officer is without prejudice to the officer’s contractual rights or rights under law, but the appointment of an officer does not of itself create any contractual rights.”

The Business Corporations Act (Saskatchwan)

“116 Subject to the articles, the bylaws or any unanimous shareholder agreement: (a) the directors may designate the offices of the corporation, appoint as officers persons of full capacity, specify their duties and delegate to them powers to manage the business and affairs of the corporation, except powers to do anything referred to in subsection (3) of section 110; (b) a director may be appointed to any office of the corporation; and (c) two or more offices of the corporation may be held by the same person.”

The Corporations Act (Manitoba)

“99(1). After the issue of the certificate of incorporation, a meeting of the directors of the corporation shall be held at which the directors may…..(d) appoint officers;”

By-law Provisions Regarding Officers

An example of a clause in a general operating by-law which governs how officers are appointed is as follows:

“Appointment – The board may from time to time designate the offices of the Corporation, appoint officers (and assistants to officers), specify their duties and, subject to the Act or the provisions of any unanimous shareholder agreement, delegate to such officers powers to manage the business and affairs of the Corporation. A director may be appointed to any office of the Corporation. Except for the chairman of the board and the managing director, an officer may but need not be a director. Two or more offices may be held by the same person.”

An example of a clause in a by-law which provides for the removal or resignation of an officer is as follows:

“ Term of Office (Removal) – In the absence of a written agreement to the contrary, the board may remove, whether for cause or without cause, any officer of the Corporation. Unless so removed, an officer shall hold office until his successor is appointed or until his resignation, whichever shall first occur.”

12 Feb 2016

Declaring a Dividend on Shares of a Company

Dividends are payments declared by the directors of a company which are paid to the shareholders (owners) of a private or public company out of the profits of that company. When declaring a dividend the dividend must be declared equally to all shareholders of a class of shares and are paid out to each shareholder in proportion to the number of shares held.

When declaring a dividend, dividends can be paid as money, shares, warrants or property.

The directors of a company will pass a resolution at a meeting of the directors or by a resolution signed by all of the directors declaring a dividend to the shareholders of a specific class of shares.

Example of a Dividend Calculation

Below is an example of how a dividend is calculated and declared:

Declaring a Dividend in the aggregate amount of $10,000
The company has 2 shareholders with 100 issued and outstanding shares.
Shareholder #1 owns 40 shares. Shareholder #2 owns 60 shares.
Shareholder #1 will receive $4,000 in dividend profits
Shareholder #2 will receive $6,000 in dividend profits
The dividend per share is equal to $100

Relevant Dates When Declaring a Dividend

The date the dividend is being declared payable. Dividends cannot be declared payable in the past and this date must be either the same date of the resolution approving the dividend or for a future date.
The date upon which the shareholders of record is determined. This provision comes into play more for public companies since shares for those companies regularly trade and the number of shareholders changes from day to day however even private companies must follow the same rules. A record date must be determined when declaring a dividend and the only shareholders who would receive the dividend would be those who were shareholders of record on that particular date. This prevents a shareholder who held shares in the company prior to the declaration of the dividend having a right to a dividend declared after he or she is no longer a shareholder.
The date of the directors resolution approving the dividend. Frequently resolutions are left undated but it is very important when declaring a dividend to include the actual date the resolution was approved so that it is very clear that the dividend is being declared for a current or future date.

Which Classes of Shares are Eligible for Dividends

Common shares have the automatic right to receive dividends, however, preference or special classes of shares are only entitled to receive dividends if the Articles of the Corporation provide for it. As well, there may be certain terms outlined in the Articles to be considered when declaring a dividend on special or preference shares.

Statutes Governing the Declaration of Dividends in Canada

Income Tax Act (Canada) deals with dividends in several different sections and it is a good idea to discuss dividends with your accountant before declaring them since there are tax consequences upon declaration of a dividend.

Approval for declaring a dividend is governed by the companies act or corporations act in each individual province or territory of Canada. The various corporation statutes across Canada will provide either some or all of the following provisions:

A corporation shall not declare or pay a dividend if there are reasonable grounds for believing that (a) the corporation is, or would after the payment be, unable to pay its liabilities as they become due; or (b) the realizable value of the corporation’s assets would thereby be less than the aggregate of its liabilities and stated capital of all classes.

A corporation may pay a dividend by issuing fully paid shares of the corporation and a corporation may pay a dividend in money or property.

If shares of a corporation are issued in payment of a dividend, the declared amount of the dividend stated as an amount of money shall be added to the stated capital account maintained or to be maintained for the shares of the class or series issued in payment of the dividend.

Solvency Test When Declaring a Dividend

Most statutes will have a solvency test that must be met before any dividend is issued. The company must not be insolvent and a dividend must not be declared if it would render the company insolvent thereafter.

Resolutions to Approve a Dividend

Example of a Resolution to Approve a Regular Dividend for Money:

“BE IT RESOLVED THAT a dividend in the aggregate amount of $** payable to the holder(s) of the issued and outstanding [common] shares in the capital of the Corporation is declared payable on [declaration date] to the shareholders of record of the Corporation as of [record date].

Any director and/or officer of the Corporation be and is hereby authorized and directed from time to time to execute and deliver all documents, agreements or other writings, whether under the corporate seal of the Corporation or otherwise, as may be necessary or advisable, and to sign for and in the name on behalf of the Corporation all such documents and writings and to take all such steps as in his or her opinion may be necessary or advisable for the purpose of giving effect to the foregoing.”

Certificates of Status for Canadian Companies

Example of a Resolution to Approve a Dividend for Property:

“BE IT RESOLVED THAT a dividend in the form of [described property] now registered in the name of the Corporation (the “Property”) is declared payable to the holder(s) of the issued and outstanding [common] shares in the capital of the Corporation.

Payment of the dividend shall be effected by transferring the Property now registered in the name of the Corporation to the holder(s) of the issued and outstanding [common] shares in the capital of the Corporation on [declaration date] to the shareholders of record of the Corporation as of [record date].

The amount of the dividend shall be equal to the fair market value of the Property, which is [$500,000].

Any director or officer of the Corporation is authorized and directed to do all things and executed all instruments and documents necessary or desirable to carry out the foregoing.”

Example of a Resolution to Approve a Dividend for Shares:

“BE IT RESOLVED THAT a dividend in the aggregate amount of $1,000 is hereby payable to the holder(s) of the issued and outstanding [common] shares in the capital of the Corporation on [declaration date] to the shareholders of record of the Corporation as of [record date], such dividend to be paid and satisfied in full by the issuance to such holder(s) of the aggregate amount of [500] fully paid and non-assessable common shares.

The directors of the Corporation hereby determine that there shall be added to the stated capital account maintained for the [common] shares of the Corporation the amount of $1,000 in respect of the [500 common] shares of the Corporation issued in payment of the dividend declared.

Any one of the directors or officers is authorized and directed to do all things and execute any agreements or documents in order to effect the foregoing including the issuance of a certificate or certificates representing the [500 common] shares to the holders(s) of [common] shares of the Corporation.’

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Capital Dividends

These dividends are a different type of dividend and the rules are different. This article is with respect to regular dividends only. For more information about these dividends refer to Capital Dividend.

Buy Dividend Resolutions

If you wish to make things easy refer to this link for a number of templates that can be purchased relating to Approving Dividends Templates.

For more information about dividends refer to:

Capital Dividend

Capital Dividend Upon Redemption

Stock Dividend

23 Oct 2013

Alberta NUANS Search

by Holly Crosgrey | posted in: AB Business Corporations Act, Alberta, Incorporation, Incorporation in Alberta, Name Granting for New Businesses | 0

An Alberta NUANS Search is required when incorporating an Alberta company. The Alberta NUANS search report is used by the Alberta government to confirm that your proposed name is available for use.

The Alberta NUANS Search will show all business names registered in Alberta which are similar to your proposed name and also all names registered in all of the other provinces and territories in Canada which may be a conflict to your proposed Alberta name.

The Alberta NUANS Search Report will also show similar named trademarks that have been registered. [margin_25t]

Preliminary Name Search Prior to Ordering Alberta NUANS Search

Prior to obtaining a NUANS Search for Alberta it is advantageous to perform a preliminary name search. If you were to pick a name and order the Alberta NUANS Search, without the preliminary name searches, you would not know in advance if that name is available.

Having in hand a NUANS Search for Alberta is no guarantee that your name will be accepted. If an exact name is showing on the Alberta NUANS search, being a name already used to register another company, your request for use of that name will be rejected.

The only way you will know if there is an exact name already registered for the proposed name is by having preliminary name searches done. If your Alberta NUANS search is rejected you will need to start over and obtain another Alberta NUANS search. Preliminary name searches help to prevent this happening.

Alberta NUANS Search Report — Nuans reports to register Canadian companies.

Alberta is more lenient with name approval than other provinces. For instance, if you wish to register Joe Clothing Store Inc. and there is a company already registered as Joe Clothing Sales Store Inc., the Alberta government will allow you to register the name Joe Clothing Store Inc. and your Alberta NUANS search will be accepted by them. This does not mean you should use that name.

This would be a clear conflict and the owners of Joe Clothing Sales Store Inc. would not be too happy to see another company registered with such a similar name. Legal action could be taken and you may need to change your company’s name.

When you have a search house perform preliminary name searches prior to ordering your Alberta NUANS Search 90% of any conflicts will come to light and you can then choose another name for your Alberta company if the name is not available. You should be aware that the preliminary name searches do not pick up all conflicts and there is a slight chance there may be additional conflicts showing on the full NUANS search for Alberta but performing preliminary name searches does assist greatly.