description of officer positions

Appointing Officers

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.”

dividend resolution

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.’

Declaring a Dividend[margin_25t]

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

Director Qualifications

Qualifications of Directors of British Columbia Companies

Every BC company must have at least one director.  A director is a person who has been appointed by the owners (shareholders) of the BC company to handle the business and affairs of the company on behalf of those owners.  Very often the directors of a BC company are also the owners, who have appointed themselves to the role of director. In order for a person to act as a director he or she must meet the qualifications of directors of British Columbia companies.

Is there any Limit on the Number of Directors a BC Company May Have

The Business Corporations Act (British Columbia) which governs BC companies provides that every private BC company must have at least one director and every public BC company must have a minimum of three directors, although all BC companies can have as many directors as they wish.

 

Persons Disqualified to Act as Directors of a BC Company

If the individual who wishes to act as a director of a BC company falls under any of the following restrictions that person cannot act as a director of a BC company:

  1. Is under the age of 18 years;
  2. Has been found by a court, in Canada or elsewhere, to be incapable of managing the individual’s own affairs;
  3. Is an undischarged bankrupt; or
  4. Has been convicted in or out of BC of an offence in connection with the promotion, formation or management of a corporation or unincorporated business, or of an offence involving fraud.

Section 124 of the Act does provide for some exemptions with respect to these restrictions for those who may be interested.

 

Resident Canadian Requirement Does not apply to Directors of BC Companies – Directors do not Need to Live in Canada

Many provinces and territories in Canada have a resident Canadian requirement which provides that a certain number of directors of a company must be “resident Canadians”.

The requirement for a director of a BC company to be a resident Canadian does not exist.  This is good news for Canadians who live abroad and wish to maintain a business in Canada.   It is also good news for those individuals who are living outside of Canada and wish to open a business in Canada but would not be able to move to Canada.

 

Does a BC Director Need to be a Shareholder

A BC director can be a shareholder but there is no legal requirement for him to hold shares in the company.

 

BC Directors Must Consent to Act

The BC incorporation statute provides that all directors must consent to act as directors of a BC company.  The directors of a BC company must consent either in advance of or at the same time of their election to the board.

BC Name Search Report

BC Name Search Report – Outline of BC Ministry Requirements for Business Names

The BC government has name granting procedures and policies that differ from some of the other provinces.  The BC government considers any similar BC name already registered and as well looks at the nature of business of the proposed business when granting names.  This article outlines some of those requirements and provides tips as to how to get a name approved and obtain a BC Name Search Report for a proposed business name registration.

 

Three Name Choices When Submitting a Request for a Proposed BC Name Search Report

The British Columbia Corporate Registry allows you to submit three proposed names for their review when requesting a BC Name Search Report. This is the only province that does this. It is very important to take advantage of this opportunity since the examiners have personal views and even though a name may appear to be clear, the examiner may feel it is not for a variety of reasons. If you give them three choices you will have a better chance of approval.

As indicated above, the examiners also consider the business purpose of a company as well when they make decisions on which names can be used for a BC business. It is not possible for you to determine which registered businesses have a similar business purpose to your proposed business name. It is therefore important to choose names that are distinct and different from all other names registered across Canada, regardless of the business purpose, and take advantage of the three choices option.

Why Use a Search House to Pre-Clear Your Names and Submit a Name Clearance Request to the BC Government on your Behalf

The BC Registry does have a free pre-clearance program in place. However, it is very limited and will not bring up all conflicts to any proposed names. If you use this service there is a very high chance that your proposed name will be rejected even if it appears to be clear because the BC name clearing program does not provide enough broad matches. The only way to do a broad pre-clearance of your proposed BC business name is to have a search house check the name through the NUANS system since it allows for broad matches.

A Canadian search house has access to all of the names registered across Canada. Not only will they be able to clear your name for use in BC, they will also be able to confirm that your proposed name can be used anywhere in Canada. Many businesses now conduct business right across Canada so it is important to pre-clear your name throughout. The BC government’s pre-clearance program does not search conflicts outside of British Columbia.

Single Word Names

The BC Ministry does not normally approve single word names. An example of a single word name for a company would be “Doe Inc.” or in the case of a business name, proprietorship name or partnership name, the word “Doe” would not be acceptable. The only time a single word name will be accepted for a proposed business is if the name is a coined name and it has been trademarked first.

Distinct Elements of a Name

The BC Ministry takes the distinct elements of a name very seriously when it considers whether a BC Reservation Report will be provided. Therefore, if you wish your name to be approved it is a good idea to following the name granting rules. There are three elements of a share company name and two elements for operating names, proprietorships and partnerships.

  • Distinctive Element – This element is the first one or two words of the name and it can be any noun, a street name, a city name, a coined name (which is a name that has been made up), a colour, an object, etc. The more different and distinct this element is will make it easier for you to obtain approval for your proposed name(s).
  • Descriptive Element – This element is in the middle of the name. It should describe the nature of business. The BC Ministry insists this element forms part of the name. An example might be online store, marina, knitting supplies, etc.
  • Legal Element – As indicated below, there must be a legal element at the end of a name for a BC company such as “Limited”, “Incorporated”, “Corporation”, “Ltd.”, “Inc.” or “Corp.” See a more detailed description of the requirements for legal elements under Corporate Designations for BC Business Names outlined below.[margin_10t][margin_10t]

 Special Characters

The BC Ministry recommends that the use of special characters for corporate and business names be avoided. Some characters are not recognizable by the system and may not be allowed because of that. The symbol for the cent sign is not allowed.  To avoid refusal to obtain a favourable BC Name Search Report it is best to avoid symbols.  Feel free to contact us if you wish to know if a particular symbol might be acceptable.

Legal Designations for BC Business Names

There are a number of different types of business registrations in the province of British Columbia and each one has to be set out in accordance with the statute requirements for that type of business. Below is a summary of the legal designations for the various types of business registrations:

BC Incorporated Company – The last word of the corporate name must have one of the following legal designations: “Limited”, “Incorporated” or “Corporation”. You can also use the short form versions of the words as follows: “Ltd.”, “Inc.” or “Corp.” If you are choosing a French name then the legal designation would need to be Limitee, Ltee., Incorporee, Inc. or Corp.

BC Partnerships and Sole Proprietorships do not have a legal ending such as Limited, Ltd., Incorporated, Inc. or Corp. however, they may use the following: Company or Co.

BC Cooperatives must use the word “Cooperative” in their name and may also use “Society”, “Union”, “Association” or “Exchange”.

BC Societies must have the designation “Association” or “Society” as the last word in the business name.

BC Limited Partnerships must use “Limited Partnership” at the end of the name.

BC Limited Liability Partnerships must use the words “Limited Liability Partnership” or “LLP” at the end of the business name.

BC Business Names Cannot Suggest a Government Connection

Certain words that may imply that the proposed business will be connected to the government are not accepted. Specifically the following words must be avoided: “government”, “ministry”, “bureau”, Secretariat”, “commission” or “certified”.

The use of the word “BC” or “British Columbia” as a distinctive part of the name (i.e. at the beginning of the proposed name) is considered in the eyes of the BC government to imply a connection to the government. In cases such as this, in order to use such a name you would need to obtain the approval of the government. You can, however, use these words at the end of a name and before the corporate designation (legal element) of the name. An example would be Veener Shipping of British Columbia Inc.

BC Business Names Must Not Suggest a Connection to the Crown

Any request for a BC Name Search Report for a proposed BC business name registration that implies any type of connection to the Royal Family or the Crown is not allowed including any reference to any living member of the Royal family, or endorsement by the Crown or Royal family. An example of this would be Prince Charles Coffee Shop Limited. You are allowed to use words that relate to places such as Prince George or Prince Rupert.

Using Personal Names in a BC Business Name

Personal names are allowed as part of incorporated BC companies. For instance, if you wish to use a name such as John Doe Inc. or Doe & Brown Inc. this would be acceptable.

Numbered Company Names

It is possible to register a numbered company with the province of BC. If you choose to do this the BC government will assign a specific number to your new incorporation. It will look similar to 999999 B.C. Ltd.

Number Names

Number names differ from a numbered BC company name. Numerals may be used in company names in the distinctive portion of the name (the first one or two words of a name). An example would be 13457 Enterprises Ltd. or Atlantic Enterprises (1998) Ltd.

 

Resources for Canadian Business Owners Inc. is a registered search house.

 

Carry-on-business-in-bc

Carry on Business in British Columbia – Statute Requirements

When considering conducting business in British Columbia is is a good idea to consider whether the business you wish to register needs to be registered to conduct business in British Columbia.

Types of Businesses that must Register to Carry on Business in British Columbia

These requirements will apply to any business in Canada registered outside of British Columbia (domestic business) which wishes to conduct business in British Columbia, and as well, for those foreign businesses that wish to conduct business in Canada (businesses registered outside of Canada in another country).

When a business registered in a jurisdiction outside of British Columbia wishes to sell or provide services in BC, the registration is called an Extra-Provincial Registration.

 

Summary of Requirements to Carry on Business in British Columbia

A simplified list of what the BC government constitutes conducting business in BC is as follows:

 

A company registered outside of British Columbia carrying on business in British Columbia MUST register within 2 months.

A company is deemed to be conducting business in BC if

  1. its name is listed in a telephone directory
  2. its name is in an advertisement with a BC address or telephone number
  3. the foreign entity has a warehouse or office in BC
  4. the foreign entity owns land in BC

 

carry-on-business-in-british-columbia

Statute Language – Carry on Business in British Columbia

For those who would like to know the exact wording of the statute, below is an excerpt from the Business Corporations Act (British Columbia):

Sections 375 (1), (2) and (3) describe what constitutes the necessity to register a foreign business in British Columbia:

(1) A foreign entity must register as an extraprovincial company in accordance with this Act within 2 months after the foreign entity begins to carry on business in British Columbia.  

(2) For the purposes of this Act and subject to subsection (3), a foreign entity is deemed to carry on business in British Columbia if (a) its name, or any name under which it carries on business, is listed in a telephone directory (i) for any part of British Columbia, and (ii) in which an address or telephone number in British Columbia is given for the foreign entity, (b) its name, or any name under which it carries on business, appears or is announced in any advertisement in which an address or telephone number in British Columbia is given for the foreign entity, (c) a resident agent, or (ii) a warehouse, office or place of business, or (d) it otherwise carries on business in British Columbia.

(3) A foreign entity does not carry on business in British Columbia (a) if it is a bank, (b) if its only business in British Columbia is constructing and operating a railway, or (c) merely because it has an interest as a limited partner in a limited partnership carrying on business in British Columbia.

(4) A foreign entity need not be registered under this Act or comply with this Part other than subsection (5) [subsection (5) relates to agent or representative] of this section, and may carry on business in British Columbia as if it were registered under this Act, if (a) the principal business of the foreign entity consists of the operation of one or more ships, and (b) the foreign entity does not maintain in British Columbia a warehouse, office or place of business under its own control or under the control of a person on behalf of the foreign entity.”

Register a Non-Resident Canadian Company