13 Feb 2016

NUANS Name Search Reports

by Holly Crosgrey | posted in: Carrying on Business in Canada, Extra-Provincial Registration, Foreign Business in Canada, General Corporate Law, Incorporating in Ontario, Incorporation, Incorporation in Alberta, Incorporation in British Columbia, Name Granting for New Businesses, NUANS, Ontario, Ontario Business Corporations Act | 0

Which Provinces Accept a NUANS report versus a Specific Province Name Clearance Report?

The province and territories which accept the NUANS report are: Alberta, Ontario, New Brunswick, Federal, Nova Scotia, Prince Edward Island and Yukon. All other jurisdictions in Canada will require a name search report specific to that province or territory.

In Alberta and Ontario you are not required to provide a name search report of any type for sole proprietorships, business names or partnerships, however, it is still advisable to perform a preliminary name search since the onus is on you to ensure the name has not been taken by any other business. If you are ordering a name search report or a name search specific to a province as required by the type of registration you are wanting, our service automatically includes preliminary name searches. The only time you would order a preliminary name search would be if you are registering a business name, sole proprietorship or partnership in a province that does not require a name search report such as Alberta or Ontario.

Name search reports and NUANS name search reports all provide the same kind of information. They determine whether a proposed name has been used by any other business across Canada and also provide a list of similar names already registered. Be advised that these reports are specific to the province they are ordered for. For instance a Federal NUANS report cannot be used for an Ontario company.

Purchase a NUANS Name Search Report

What is a Name Search Report

A name search report compares the name of a proposed business to all other names already registered across Canada.

A NUANS report is specific to certain provinces and is a seven-page report which is generated from the search system which compares a proposed name or trade-mark with the database of existing names that have been registered anywhere across Canada.

Let our Experts assist you with obtaining a NUANS or Name Search Report for your New Business

What Information is Provided by a Name Search Report or a NUANS Report

By comparing the proposed name against the NUANS name search system or a name granting system in a province or territory, any similarity existing between the proposed name and the names in the database, will show up on the name search report. This will allow you to determine whether you are planning on using a name for your company that is too similar to another name. It is important for your name to be as distinct as possible. If you are ordering a name search for a province that does not accept the NUANS you will be provided with a name search that compares names to other names in that particular province or territory but the name search report will also look at similar names in other provinces right across Canada that may be a conflict.

What is A NUANS Search System

The NUANS search system is a computerized search system which contains a list of all of the company names, sole proprietorships, partnerships, business names and trade-marks registered in the federal, provincial and territorial jurisdictions in Canada. The purpose of the system is to keep track of all names registered across Canada.

Even if a province or territory has its own name search system in place, the NUANS system will pick up those names in its database and therefore when performing a preliminary name search the search system is the best way to get a pre-clearance of your name.

Only search houses can perform preliminary name searches or full NUANS name searches through the NUANS system with the exception of the federal government’s site which provides limited access to doing searches.

The federal website’s preliminary name search system is limited in that it does not allow for broad searches and it is not workable if ordering a Federal NUANS and it is limited with respect to doing preliminary name searches for other provinces and territories. In order to effectively do a preliminary name search on your proposed business you must have an experienced search house perform the search.

What is a Name Search Report and NUANS Report Used For

A NUANS name search report must accompany articles of incorporation when incorporating a company in the federal, Alberta, Ontario, New Brunswick, Prince Edward Island and Yukon jurisdictions of Canada.

NUANS reports are also required in some provinces for registration of business names and partnerships. In Ontario and Alberta you are not required to provide any form of name search when registering a sole proprietorship or partnership.

Do All Provinces and Territories Accept the NUANS Name Search

Some provinces and territories have their own name search system and they do not except the NUANS name search report. Those provinces and territories will require a name search specific to that jurisdiction. The jurisdictions in Canada that do not accept the NUANS report are British Columbia, Manitoba, Saskatchewan, Nunavut and Northwest Territories.

If you are registering a sole proprietorship, business name or partnership in a province or territory where a name search or NUANS report is not required (such as Ontario or Alberta), it is a good idea to perform a preliminary name search to ensure the name is available but a full name search report or NUANS report would not be necessary. All you need to do is ensure the name is available before you register your sole proprietorship or partnership.

Even though not all provinces and territories accept a NUANS report since all names registered in those jurisdictions are recorded in the NUANS database, it is still advisable to do a preliminary name search through the NUANS system to ensure the name is available. Resources for Canadian Business Owners can provide you with a preliminary name search for situations for situations when a full NUANS report is not required.

If you require a name search report or NUANS name search report to register your company, business name, sole proprietorship or partnership, Resources for Canadian Business Resources Inc. will provide you with unlimited free preliminary name searches when a name search report or NUANS report is ordered through us.

Purchase a Name Search Report

How Does the NUANS Name Search System Capture the Names from the Other Name Search Systems in Canada

The governments which do not accept reports from the NUANS name search system provide a list of any names that have been registered in their province or territory to the NUANS name search system and these names are added to the NUANS system database on a regular basis.

Why is a Name Search or NUANS Report Necessary

You cannot incorporate a company with a name that is exactly the same as another name already registered. It does not matter whether you are registering a company in PEI and the duplicate name is in BC, you will not be able to register an exact name.

When you go to incorporate a company the government must first know if that name has been taken. In order for the government to ensure that the name is free to use it needs to see a NUANS name search report or similar name search report depending on the jurisdiction.

The report will show the government whether there is an exact name already registered for the proposed name you wish to use. The name search report is also your way of determining whether there are additional conflicts to your name. The onus will be on you to look over the entire report and make sure you are not proposing to use a name that is even close to another corporate name or trade-mark since the owner of the name could still have a claim against you if your name is too similar and his or her company name has had a large presence in the marketplace for many years. Order a NUANS name search now.

How Do You Ensure Your Proposed Business Name is Distinct

Refer to the section on name guidelines for more information on how to ensure you have picked a distinct and descriptive name for your company that will not be challenged by the government or another company.

Are There Different Types of NUANS Name Search Reports

Each jurisdiction that accepts the NUANS Name search report will have its own form of NUANS report. If you are incorporating an Ontario company you will be required to obtain an Ontario NUANS Name Search report. If you are incorporating a federal company you will be required to obtain a federal NUANS name search report. If you are incorporating an Alberta company you will be required to obtain an Alberta NUANS Name Search report. Despite the fact that each of these reports is different, all reports will search the NUANS database system for similar names right across Canada.

Why Are Federal Name searches different from Alberta Name Searches, Ontario NUANS, PEI and NB Name Searches

An Ontario company can be incorporated with any name which is different in any regard, even if it is only a few letters in the name. A federal company differs however because when the federal government reviews articles of incorporation together with a Canada NUANS it will not allow any name which is similar to another company in many regards. When you are submitting incorporation documents for a federal company ensure your name is as different as possible from any other company name being used in Canada. Be prepared that the government may also disallow your proposed name if it sounds the same as another existing company even if the spelling is substantially different. You should be prepared that your name might not be accepted. Each time you submit articles for review you will need to submit a new NUANS report. If the first name you pick is too close to others on record, then you will have to buy another federal NUANS and submit again. A qualified search house will be able to assist you with having a better chance of your NUANS report being accepted the first time. Resources for Canadian Business Owners has experience in having proposed names accepted even after they have been rejected. However, some times additional searches must be performed to rule out conflicting companies and there can be an additional cost here. It is possible to obtain an advance Name Decision report from Industry Canada before you submit your articles for filing. Resources for Canadian Business Owners will be glad to submit a request for a Name Decision for your federal incorporation. This will also include as many preliminary name searches as you require without further cost. We are experienced in reviewing preliminary name search results through the NUANS system to help increase your chances of being accepted the first time round when you are submitting articles of incorporation for companies in the federal jurisdiction.

Why Does It Matter if I use a Name Similar to a Name in Another Province

It may seem that if you are registering a company in Ontario and another company in the Northwest Territories has a similar name, that this should not be a problem. With technology as it is today, companies are conducting business across Canada, if not across the World. You will have no idea whether the company with the name that you are proposing may at some time in the future be conducting business in the very province you wish to register in and then there would be a conflict. Further, the Canadian government provides that any company that is registered in any province or territory in Canada can apply to be registered to carry on business in another province or territory. It is therefore very important that your proposed name is distinct and descriptive. This is called an extra-provincial registration.

Is a NUANS Report Required for a Business Name or Sole Proprietorship Registration

A NUANS Report is not required in Ontario and Alberta, and some other provinces when registering business names, sole proprietorships and partnerships. In Ontario and Alberta anyone can register the exact same business name or sole proprietorship as one registered already. However, it is advisable that you do a preliminary NUANS name search before you register to ensure no one else is using the name regardless. This is the one time when you should pay for a preliminary name search for your business name. There is no need to purchase a full NUANS report or other name search report for a business name, sole proprietorship or partnership being registered in Alberta and Ontario. All that is required is to do a preliminary name search just to ensure you are picking a name that is different. It is always advisable not to use a name that is too similar to another name since this would be a conflict for your business in the long run. Some business names such as “Bell Canada” have a high standing in the marketplace because of the number of years the name has been registered and the number of people who know the name.

You should be aware that there is no such thing as a Federal Business Name registration, Federal partnership registration or Federal Sole Proprietorship registration. Business names, partnerships and sole proprietorships are governed by the provincial and territorial jurisdictions in Canada.

What is a Preliminary NUAN Name Search

If you purchase a NUANS Name Search Report and the name you wish to use for your incorporation is on the report as registered for another company or business, you will not be allowed to incorporate with that name. It is therefore important that you do a preliminary NUANS name search first in order to ensure before hand that the name is free. Otherwise, if you do not first ensure a pre-check of the name is done and you order a full NUANS report or other form of name search report, your registration could be rejected if the name is too similar or the same as another name registered.

Please note however that preliminary NUANS Name Searches are not fool proof and there is always a chance a conflict will show up on the full NUANS Name Search or other name search report that did not come up during the Preliminary NUANS Name Search.

You can keep buying full NUANS Name Search reports but it will become costly. It is better that you check the name first with a Preliminary NUANS Name search. Resources for Canadian Business Owners provides FREE UNLIMITED preliminary name searches with the purchase of a NUANS or Name Search Report. We will make great efforts to pre-clear your name in advance so that the odds of your proposed name being rejected are reduced.

How do I Arrange to have a Preliminary Name Search

Resources for Canadian Business Owners Inc. will do as many preliminary Name Searches as you wish with the purchase of a full NUANS Name Search or other Name Search Report. If you are not required to submit a name search report with your registration Resources for Canadian Business Owners will be glad to perform a preliminary name search for you at a nominal fee. This service should only be used when a name search report is NOT required

How Long Does it Take to Get a Name Search or NUANS Report

If you are ordering a report from a province or territory that does not accept a NUANS report, it can take a few days to a week to obtain the report. If you are ordering a NUANS name search report, it takes from 40 minutes to three hours to obtain a NUANS Name Search Report. Once you order a NUANS report a confirmation email will be sent to you to let you know that we have received your request. Depending on the number of searches requested at that time it might take us 40 minutes or three hours. Be assured though you will receive the NUANS in the same day whether you order it at 6:00 a.m. in the morning or 10:00 p.m. at night. Frequently we have someone close to the computer for most of the day right up until late evening so feel free to contact us at any time of the day. We are open 7 days a week. We look forward to serving you.

How Long is a Name Search or NUANS Report in effect.

A NUANS name search report will be in effect for 90 days from the date of issue. If yuou do not use the report until after that time you will be required to order a new one and most other name search reports are also effective for a similar length period.

Name Searches for Non-Profit Corporations and Charities

We can provide you with information about registered companies, partnerships, sole proprietorships or operating trade names on the public record throughout Canada including extensive due diligence searching and reporting.

We also provide registration services for Canadian companies, sole proprietorships, partnerships and operating trade names in the provinces and territories of Canada.

Our staff has over 30 years’ experience in corporate law and we will be glad to answer your questions. We take pride in our work and will provide you with the best, fastest, accurate and reasonably priced service available.

Depending on the province or territory you wish to incorporate your non-profit corporation will depend on the type of name report that you get. There is no difference between a name search report for a not for profit corporation or charitable corporation and a share corporation. It is the province or territory that governs the report you get.

For instance, a name search report for a share company being incorporated in Ontario is the same report given to a non profit or charity corporation wishing to incorporate in Ontario, being an Ontario NUANS name search report.

NUANS Search Houses are trained on the best method of performing Preliminary NUANS Name Search reports in order to ensure that the most conflicts to your proposed names can be found prior to ordering a full NUANS Name Search Report.

If you incorporate a numbered company a NUANS name search report will not be required since the government will provide you with the next number in line. An example of a numbered Ontario company would be a corporation having a name such as 9999999 Ontario Inc.

A numbered federal company might be a corporation with a name called 9999999 Canada Inc. and an Alberta numbered company might be 2244444 Alberta Ltd. The numbers are given out consecutively. You cannot choose the number for your company.

13 Feb 2016

Qualifications for Directors of Ontario Companies

by Holly Crosgrey | posted in: Directors, Incorporating in Ontario, Incorporation, Maintaining Your Company, Ontario, Ontario Business Corporations Act | 0

A director is an individual who is elected by the shareholders (owners) of the company to assist with the management and supervision of the day to day affairs of the company. Frequently the directors of a company are also the owners of the company. Not just anyone can be a director of an Ontario company. In order to meet the qualifications for directors of Ontario companies reference must be made to the statute that governs Ontario companies.

How many directors can an Ontario Company Have

Ontario companies must have at least one director for private companies and at least three directors for public companies. There is no limit on the number of directors an Ontario company may have and if a private company wishes to have many directors it may do so.

Who can Qualify to Act as a Director of an Ontario Company

The Business Corporations Act (Ontario) explains this requirement by outlining what disqualifies someone from being a director of an Ontario company.

The following persons are disqualified from being directors of an Ontario company:

1. A person who is less than 18 years of age;

A person who has been found under the Substitute Decisions Act, 1992 (Ontario) or under the Mental Health Act (Ontario) to be incapable of managing property or who has been found to be incapable by a court of Canada or elsewhere;
A person who is not an individual; or
A person who has the status of bankrupt.

Director’s Consent to Act as a Director

A person cannot be appointed to be a director of an Ontario company unless that person has agreed to do so. The Act provides that after an individual is elected as a director they must consent in writing to the appointment within ten days. This written consent is inserted into the minute book for the Ontario company and maintained there for future reference.

Resident Canadian Requirement for Directors of Ontario Companies

There is a requirement for 25% of the directors of an Ontario company to be “resident Canadians”. For more information about this requirement refer to Resident Canadian Requirements for Directors of Ontario Companies.

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.”

13 Feb 2016

Resident Canadian Requirement for Directors of Ontario Companies

by Holly Crosgrey | posted in: Directors, Incorporating in Ontario, Incorporation, Maintaining Your Company, Ontario, Ontario Business Corporations Act | 0

All Ontario companies must have at least one director and this person must be a resident Canadian as defined in the Business Corporations Act (Ontario). Director(s) are the individuals who manage and supervise the business on behalf of the owners (shareholders). The directors will also appoint officers to assist.

The Business Corporations Act (Ontario) provides for a residency requirement for directors. 25% of the directors of an Ontario company must be “resident Canadians” as defined by the Act. This means that if an Ontario company has one to four directors, at least one of them must be a resident Canadian.

Definition of Resident Canadian

A resident Canadian is defined in the Act as an individual who is (a) a Canadian citizen ordinarily resident in Canada, (b) a Canadian citizen not ordinarily resident in Canada who is a member of a prescribed class of persons, or (c) a permanent resident within the meaning of the Immigration and Refugee Protection Act (Canada) and ordinarily resident in Canada.

Meaning of the Definition of Resident Canadian

In lay terms, to be considered a “resident Canadian” pursuant to the Act, you must be a Canadian citizen living in Canada or a permanent resident living in Canada. Therefore, if you are a Canadian citizen not living in Canada you would not qualify to be the sole director of a company, however, you could be a director as long as there were other directors elected to the board meeting the 25% resident Canadian requirement. As well, a non-Canadian may not be the sole director of a company.

On the other hand, not all provinces and territories have the same rules. In British Columbia the Business Corporations Act (British Columbia) does not provide for a residency requirement. Therefore a non-Canadian or a Canadian citizen not living in Canada may be the sole director of a BC company. This is good news for those Canadians who wish to conduct business in Canada but also wish to live outside of Canada. As well, foreign individuals are able to set up BC companies and act as the sole director of those companies since there is no requirement for them to live in Canada. Refer to our blog page for more information about residency requirements for BC companies.

13 Feb 2016

Resolutions for Ontario Companies – Directors Resolutions | Shareholders Resolutions

by Holly Crosgrey | posted in: Incorporating in Ontario, Incorporation, Maintaining Your Company, Ontario, Ontario Business Corporations Act | 0

Resolutions for Ontario companies are governed pursuant to the Ontario Business Corporations Act.

What is a Resolution

A resolution is a form of approval. It can be to approve any matter that the corporation wishes. Some examples are approval of the change of registered office address of a company, approval to amend the articles of a company, approval to enact by-laws of a company, etc.

Resolutions are Approved by Directors or Shareholders

In some cases, certain matters must be approved by the directors and in other cases it may be that shareholder approval is required. For instance if the company wishes to change its name from one alpha name to another alpha name the shareholders must approve this change before it can be implemented. If a company wishes to enter into an agreement, the directors would approve the matter. In some cases, both directors and shareholders may need to approve a resolution.

How Are Directors Resolutions and Shareholders Resolutions Approved

Resolutions can be approved at meetings of the directors or shareholders, pursuant to which every director/shareholder has been given notice of the meeting, and for which at least a quorum of those directors/shareholders showed up for the meeting. (i.e. the minimum number of directors/shareholders that can form a quorum is outlined in the company’s by-law and frequently is a majority).

Resolutions can also be approved without holding a meeting as long as all of the directors or shareholders, as the case may be, sign and approve a written resolution.

What Types of Resolutions are There

There are three types of resolutions:

Directors Resolution – This is a resolution that is either (a) passed by a quorum of directors at a meeting held to approve it, or (b) a resolution in writing signed by all of the directors.

Shareholders Resolution – This is a resolution that is either (a) passed by a quorum of shareholders at a meeting held to approve it, or (b) a resolution in writing signed by all of the shareholders entitled to vote.

Special Resolution – A special resolution means a resolution that is (a) submitted to a special meeting of the shareholders of a company duly called for the purpose of considering the resolution and passed by at least 2/3rds of the votes cast at the meeting, or (b) consented to in writing by each shareholder of the company entitled to vote.

What Does a Resolution Look Like

We have included an example of a resolution on this page. There is always a heading on the resolution and a footer which shows the signatures.

The Heading should say either (a) Resolution of the Directors, or (b) Resolution of the Shareholders, or (c) Special Resolution as the case may be.

The footer should reference that all of the directors or shareholders are signing and the name of the statute that they are relying upon.

How do You Know Whether the Directors or Shareholders Must Approve a Particular Matter

The Ontario Business Corporations Act is online and can be searched to find out what type of approval you need for a matter. For instance, let us say that you are changing the directors of a company by increasing the number. If you search “number of directors” you will find section 125(3) which indicates that the number of directors is determined by special resolution.

12 Feb 2016

Ontario Operating By-Law – Enactment, Amendment and Repeal pursuant to the Business Corporations Act

by Holly Crosgrey | posted in: By-laws, Incorporating in Ontario, Incorporation, Ontario, Ontario Business Corporations Act | 0

What are by-laws?

By-laws are the rules pursuant to which a corporation conducts business. Many of those rules will be the same as outlined in the statute governing the company. However, in some cases the statute may provide that the by-laws can override certain standard statute provisions. Ontario operating by-laws are the main rules for the corporation.

Ontario Operating By-law

The Ontario operating by-law is the first by-law to be enacted by a company upon incorporation and every company must have an operating by-law. The rules outlined in the operating by-law are with respect to the number of directors, directors’ duties and meeting requirements, the appointment of officers and the rules relating to shareholders including meeting requirements, how many shareholders must be in attendance for it to be a valid meeting, etc. These are just a few of the provisions outlined in a standard Ontario operating by-law.

Section 116 of the Business Corporations Act (Ontario) provides the following statute requirements respecting Ontario by-laws for corporations:

“(1) Unless the articles, the by-laws or a unanimous shareholders agreement otherwise provide, the directors may, by resolution, make, amend or repeal any by-laws that regulate the business or affairs of a corporation.

(2) Where the directors make, amend or repeal a by-law under subsection (1), they shall submit the by-law amendment or repeal to the shareholders at the next meeting of shareholders, and the shareholders may confirm, reject or amend the by-law, amendment or repeal.

(3) Where a by-law is made, amended or repealed under subsection (1), the by-law, amendment or repeal is effective from the date of the resolution of the directors until it is confirmed, confirmed as amended or rejected by the shareholders under subsection (2) or until it ceases to be effective under subsection (4) and, where the by-law is confirmed or confirmed as amended, it continues in effect in the form in which it was so confirmed.

(4) If a by-law or an amendment or repeal of a by-law is rejected by the shareholders, or if the directors do not submit the by-law, amendment or repeal to the shareholders as required under subsection (2), the by-law, amendment or repeal ceases to be effective on the date of such rejection or on the date of the meeting of shareholders at which it should have been submitted, as the case may be, and no subsequent resolution of the directors to make, amend or repeal a by-law having substantially the same purpose or effect is effective until it is confirmed or confirmed as amended by the shareholders.”

Amending or Repealing a By-Law

If the officers of an Ontario company wish to amend an Ontario operating by-law or another by-law, which has been approved by the directors and shareholders, the manner in which to approve the amendment to the by-law is to create a new by-law providing for the amendment. For instance the officers will create a new by-law no. 2 which repeals all or certain sections of operating by-law no. 1, and includes the new replacement sections to be approved. The officers would present by-law no. 2, being an amendment to by-law no. 1, to the directors for approval. If the directors approve the by-law then the directors shall present the by-law to the shareholders for approval at the very next meeting of the shareholders.

Approving a By-law

When the directors approve a by-law it is said that the by-law has been “enacted by the directors” and the shareholders of the company are said to have “confirmed the by-law”. All directors and shareholders of a corporation must have an opportunity to review the by-law and approve it for the by-law, amendment or repeal to be considered to be properly approved in accordance with the requirements under the Business Corporations Act (Ontario).

Need a By-law? Purchase a Microsoft Word Version of By-law No. 1.

31 Jan 2016

Annual Resolutions

by Holly Crosgrey | posted in: Annual Resolutions, Canada Business Corporations Act, Directors, Directors Resolutions, Federal, Financial Statements, General Corporate Law, Maintaining Your Company, Ontario, Ontario Business Corporations Act, Shareholder Resolutions | 0

This Article will be specific to the annual corporate approvals (frequently called annuals or annual resolutions) required for companies incorporated pursuant to the Business Corporations Act (Ontario) and the Canada Business Corporations Act. Most other jurisdictions in Canada would have the same or similar requirements.

In order to document these approvals a series of resolutions are prepared and signed by the directors and shareholders of the company. Below is a breakdown of each document that is normally prepared and approved.

For more information about the rules of preparing and signing resolutions refer to Preparing Resolutions.[margin_30t]

Annual Resolutions can also be approved a meetings of the directors and shareholders and public companies will hold meetings each year to approve annual resolutions.

Purchase a Word Version Version of Annual Resolutions

Purchase Word Versions of Dividend Approval Resolutions

Approval of Financial Statements by Directors

All Canadian companies are required to file a federal tax return each year and as part of that procedure financial statements are prepared by the accountant of the Corporation.

As part of the annual resolutions, the directors of the Corporation must (a) approve the financial statements, (b) approve the directors executing the financial statements; and (3) approve the financial statements being shown to the shareholders. Below is a form of resolution that handles all three of these approvals:

Statute Reference:

Business Corporations Act (Ontario)

“Section 155. The financial statements required under this Act shall be prepared as prescribed by regulation and in accordance with generally accepted accounting principles. R.S.O. 1990, c. B.16, s. 155.”

“Section 159. (1) The financial statements shall be approved by the board of directors and the approval shall be evidenced by the signature at the foot of the balance sheet of any director authorized to sign and the auditor’s report, unless the corporation is exempt under section 148, shall be attached to or accompany the financial statements. R.S.O. 1990, c. B.16, s. 159 (1); 2010, c. 16, Sched. 5, s. 1 (2).”

Note: An offering corporation is a public corporation. Financial statements of public corporations must be audited. The above paragraph is referring to non-offering corporations, which are private corporations, and have an option to be audited or unaudited.

Canada Business Corporations Act

“Section 158 (1) The directors of a corporation shall approve the financial statements referred to in section 155 and the approval shall be evidenced by the manual signature of one or more directors or a facsimile of the signatures reproduced in the statements.”[margin_30t]

Acceptance of Financial Statements by Shareholders

Once the directors have approved the financial statements they are mandated to provide the shareholders with a copy of the financial statements. Below is an example of a shareholders resolution acknowledging receipt of the financial statements:

Statute Reference:

Business Corporations Act (Ontario)

“Section 154. (1) The directors shall place before each annual meeting of shareholders,….(a) in the case of a corporation that is not an offering corporation, financial statements for the period that began on the date the corporation came into existence and ended not more than six months before the annual meeting or, if the corporation has completed a financial year, the period that began immediately after the end of the last completed financial year and ended not more than six months before the annual meeting;”

Canada Business Corporations Act

“Section 155 (1) Subject to section 156, the directors of a corporation shall place before the shareholders at every annual meeting (a) comparative financial statements as prescribed relating separately to (i) the period that began on the date the corporation came into existence and ended not more than six months before the annual meeting or, if the corporation has completed a financial year, the period that began immediately after the end of the last completed financial year and ended not more than six months before the annual meeting, and (ii) the immediately preceding financial year;”[margin_30t]

Election of Directors by Shareholders

The shareholders of the Corporation will elect the directors of the Corporation for the next year as part of the annual resolutions. Even if the directors are not changing a resolution should be prepared to elect the directors. If this resolution is not approved the current directors would still hold office.

Statute Reference:

Business Corporations Act (Ontario)

“Section 119 (4) Subject to clause 120 (a), shareholders of a corporation shall elect, at the first meeting of shareholders and at each succeeding annual meeting at which an election of directors is required, directors to hold office for a term expiring not later than the close of the third annual meeting of shareholders following the election. R.S.O. 1990, c. B.16, s. 119 (4).”

Canada Business Corporations Act

“Section 106(3) Subject to paragraph 107(b), shareholders of a corporation shall, by ordinary resolution at the first meeting of shareholders and at each succeeding annual meeting at which an election of directors is required, elect directors to hold office for a term expiring not later than the close of the third annual meeting of shareholders following the election.”[margin_30t]

Consent to Act as a Director

Every director who is elected or appointed must consent to act as a director of the Corporation and agree in writing to act. A consent to act is only required to be provided once during the term of appointment, however, customarily these consents are included in the annual resolutions package.

25% of the directors must be resident Canadians and the consent confirms the residency.

The statute also provides that directors can hold meetings by electronic means provided the directors consent to such meetings.

Not just anyone can be a director of a corporation. Refer to Qualifications of Directors of Federal Companies and Qualifications of Directors of Ontario Companies for more information.[margin_15t]

Statute Reference:

Business Corporations Act (Ontario)

“Section 1(1) “resident Canadian” means an individual who is,

(a) a Canadian citizen ordinarily resident in Canada,

(b) a Canadian citizen not ordinarily resident in Canada who is a member of a prescribed class of persons, or

(c) a permanent resident within the meaning of the Immigration Act (Canada) and ordinarily resident in Canada;”

“Section 118(3) At least 25 per cent of the directors of a corporation other than a non-resident corporation shall be resident Canadians, but where a corporation has less than four directors, at least one director shall be a resident Canadian. 2006, c. 34, Sched. B, s. 19 (2).”

“Section 119(9) Subject to subsection (10), the election or appointment of a director under this Act is not effective unless the person elected or appointed consents in writing before or within 10 days after the date of the election or appointment. 1999, c. 12, Sched. F, s. 8.”

“Section 119(10) If the person elected or appointed consents in writing after the time period mentioned in subsection (9), the election or appointment is valid. 1999, c. 12, Sched. F, s. 8.”

“Section 119(11) Subsection (9) does not apply to a director who is re-elected or re-appointed where there is no break in the director’s term of office. 1999, c. 12, Sched. F, s. 8.”

“Section 126(13) Unless the by-laws otherwise provide, if all the directors of a corporation present at or participating in the meeting consent, a meeting of directors or of a committee of directors may be held by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and a director participating in such a meeting by such means is deemed for the purposes of this Act to be present at that meeting. R.S.O. 1990, c. B.16, s. 126 (13).”

Canada Business Corporations Act

“Section 2(1) resident Canadian means an individual who is (a) a Canadian citizen ordinarily resident in Canada, (b) a Canadian citizen not ordinarily resident in Canada who is a member of a prescribed class of persons, or (c) a permanent resident within the meaning of subsection 2(1) of the Immigration and Refugee Protection Act and ordinarily resident in Canada, except a permanent resident who has been ordinarily resident in Canada for more than one year after the time at which he or she first became eligible to apply for Canadian citizenship;”

“Section 106(9) An individual who is elected or appointed to hold office as a director is not a director and is deemed not to have been elected or appointed to hold office as a director unless (a) he or she was present at the meeting when the election or appointment took place and he or she did not refuse to hold office as a director; or (b) he or she was not present at the meeting when the election or appointment took place and (i) he or she consented to hold office as a director in writing before the election or appointment or within ten days after it, or (ii) he or she has acted as a director pursuant to the election or appointment.”

“Section 114(9) Subject to the by-laws, a director may, in accordance with the regulations, if any, and if all the directors of the corporation consent, participate in a meeting of directors or of a committee of directors by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting. A director participating in such a meeting by such means is deemed for the purposes of this Act to be present at that meeting.”[margin_30t]

Appointment of Officers by Directors

The directors elected at the annual meeting or by annual resolutions will then appoint the officers they wish to assist them for the next year. It can be the same officers as in the previous year. The form of approval is as follows:

Statute Reference:

Business Corporations Act (Ontario

“Section 133. Subject to the articles, the by-laws or any unanimous shareholder agreement, (a) the directors may designate the offices of the corporation, appoint officers, specify their duties and delegate to them powers to manage the business and affairs of the corporation, except, subject to section 184, powers to do anything referred to in subsection 127 (3); (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.”

Canada Business Corporations Act

“Section 121 Subject to the articles, the by-laws 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 115(3); (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.”[margin_30t]

Appointment of Accountant or Auditor

The shareholders of a Corporation will either appoint an accountant or appoint an auditor for the ensuing year. Below is the form of resolution that can be modified for either situation.

Statute Reference:

Business Corporations Act (Ontario)

“Section 149(2) The shareholders shall at each annual meeting appoint one or more auditors to hold office until the close of the next annual meeting and, if an appointment is not so made, the auditor in office continues in office until a successor is appointed. R.S.O. 1990, c. B.16, s. 149 (2).”

“Section 149(7) The remuneration of an auditor appointed by the shareholders shall be fixed by the shareholders, or by the directors if they are authorized so to do by the shareholders, and the remuneration of an auditor appointed by the directors shall be fixed by the directors. R.S.O. 1990, c. B.16, s. 149 (7).”

Canada Business Corporations Act

“Section 162 (1) Subject to section 163, shareholders of a corporation shall, by ordinary resolution, at the first annual meeting of shareholders and at each succeeding annual meeting, appoint an auditor to hold office until the close of the next annual meeting.”

“Section 162(4) The remuneration of an auditor may be fixed by ordinary resolution of the shareholders or, if not so fixed, may be fixed by the directors. 1974-75-76, c. 33, s. 156; 1978-79, c. 9, ss. 1(F), 4″[margin_30t]

Consent to Non-Appointment of An Auditor

Most companies do not have their financial statements audited by an auditor. Instead they have financial statements prepared by an accountant. In those cases, the shareholders of the Corporation must approve the non-appointment of an auditor. This approval requires the consent of all of the voting and non-voting shareholders as follows:[margin_15t]

Statute Reference:

Business Corporations Act (Ontario)

Section 148. In respect of a financial year of a corporation, the corporation is exempt from the requirements of this Part regarding the appointment and duties of an auditor if, (a) the corporation is not an offering corporation; and (b) all of the shareholders consent in writing to the exemption in respect of that year. 1998, c. 18, Sched. E, s. 23.

Canada Business Corporations Act

Section 163 (1) The shareholders of a corporation that is not a distributing corporation may resolve not to appoint an auditor. 163 (2) A resolution under subsection (1) is valid only until the next succeeding annual meeting of shareholders. (3) A resolution under subsection (1) is not valid unless it is consented to by all the shareholders, including shareholders not otherwise entitled to vote.

Note: Reference to distributing corporation is another way of saying public corporation.

Appointment of Auditor

In the case where an auditor is being appointed for an upcoming financial year of the Corporation, the auditor should receive notice of its appointment as follows:[margin_20t]

Statute Reference:

Business Corporations Act (Ontario)

Section 149 (9) The corporation shall give notice in writing to an auditor of the auditor’s appointment forthwith after the appointment is made. R.S.O. 1990, c. B.16, s. 149 (9).

Canada Business Corporations Act

Silent

When Should Annual Resolutions Be Approved

The financial statements of a Corporation must be finalized and incorporated into the corporate tax return for the company within six months of the end of the financial year. Therefore, the annual resolutions cannot be dated prior to the financial statements being prepared and no later than six months after the financial year end.

Declaration of Dividends

As part of the preparation and approval of annual resolutions frequently dividends will be declared. For more information about how to approve a dividend refer to Declaring a Dividend.

13 Jul 2015

Directors Resolution to Approve an Agreement

by Holly Crosgrey | posted in: Directors, General Corporate Law, Maintaining Your Company, Ontario Business Corporations Act | 0

The directors of a corporation are elected by the shareholders to manage the affairs of the corporation. The duties of the directors are outlined in the statute of incorporation, in the by-laws and as the shareholders may direct from time to time. The directors appoint officers to assist them with the day to day matters. For small operations there may be one shareholder, one director and one officer and this may be the same person. For larger operations, there may be numerous directors and officers.

One of the duties of the directors of a corporation is to approve agreements, contracts, leases and other documents that the corporation is or has entered into with other parties. The officers will present these documents to the directors for their approval before entering into the particular agreement or contract.

There are two ways in which a directors resolution to approve an agreement can be documented: (1) directors approval BEFORE the agreement has been signed, and (2) directors approval AFTER the agreement has been signed. Technically all agreements, leases, promissory notes, contracts, etc. should be shown to the directors before they are executed by the corporation’s officers, however, in some cases this does not happen, and the agreement has to be approved after the fact.

Legalities Around Preparing a Directors Resolution to Approve an Agreement

The statute of incorporation provides clear instructions as to how directors approve matters. Most statutes will provide for the manner in which a meeting can be held in order that a directors resolution to approve an agreement can be passed. Many statutes also provide for directors to approve matters without holding a meeting. In this case, ALL of the directors must sign a resolution. An example of a clause in a statute providing for directors to sign without holding a meeting is shown below:

“Resolutions in writing

129 A resolution in writing, signed by all the directors entitled to vote on that resolution at a meeting of directors or a committee of directors, is as valid as if it had been passed at a meeting of directors or a committee of directors.”

The Characteristics of a Directors Resolution to Approve an Agreement

A Directors Resolution to approve an agreement has a standard layout that provides for the following:

Recitals (these explain what the agreement or matter is about and what the directors hope to achieve by the approval)
Approval of the Terms and Conditions of the Agreement
Approval of the form of Agreement
Approval of the authorized signing authorities who can sign the agreement on behalf of the corporation
Approval of the delivery of the agreement by the authorized signing authorities
A catchall phrase

Frequently, as well, parties outlined in a directors resolution will have their names defined. An example of this would be 222553 Ontario Inc. (hereinafter referred to as “222553”). If the name of the company has been defined in this manner, then every time the name of 222553 Ontario Inc. shows up in the resolution after it is defined it will be shown as 222553. You will find examples of resolutions on this page that show how this is done.

How to prepare a Directors Resolution to Approve an Agreement BEFORE it is signed

The following will outline the different paragraphs that should be in the directors resolution in order for it to cover all requirements for proper approval..

Recitals

The first step is to describe the agreement being signed in the recitals. Below are some examples:

EXAMPLE 1: “WHEREAS the Corporation wishes to enter into an agreement of purchase and sale (the “Agreement”) among the Corporation, 4211323 Ontario Inc. (“4211323”) and John Doe dated the 10^th day of July, 2015, pursuant to which the Corporation shall purchase from 4211323 all of the assets of a business known as The Green Tree;”

EXAMPLE 2: “WHEREAS the Corporation wishes to enter into an employment agreement (the “Agreement”) between the Corporation and John Doe dated the 10^th day of July, 2015 which sets out the terms of employment of John Doe;”

EXAMPLE 3: “WHEREAS the Corporation wishes to enter into a lease agreement (the “Lease”) between the Corporation and John Doe Realty Inc. (“John Doe”) dated the 10^th day of July, 2015 pursuant to which John Doe will rent to the Corporation the premises located at 1145 Midland Avenue, Scarborough, Ontario under the terms and conditions more particularly described in the Lease;”

Approval of Agreement

Below are some examples of the language used in resolutions to approve an agreement:

EXAMPLE 1:

“NOW THEREFORE BE IT RESOLVED THAT:

The entering into of the Agreement by the Corporation, pursuant to the terms and conditions thereof, is hereby approved.
The form of Agreement, as presented to the directors of the Corporation, is hereby approved.”

EXAMPLE 2:

“NOW THEREFORE BE IT RESOLVED THAT:

The entering into by the Corporation of the Lease, pursuant to the terms and conditions therein, is hereby approved.
The form of Lease, annexed hereto as Schedule “A”, is hereby approved.”

Authorized Signing Authority for a Directors Resolution to Approve an Agreement

The next step in the directors resolution is to determine who the signing officers will be that have authority to execute the agreement on behalf of the corporation and to determine who can deliver the agreement. The by-laws of a corporation determine who can sign agreements on behalf of a corporation. A standard clause in a by-law will be as follows:

“Execution of Instruments – Deeds, transfers, assignments, contracts, obligations, certificates and other instruments may be signed on behalf of the Corporation by any officer or director of the Corporation. In addition, the board may from time to time direct the manner in which and the person or persons by whom any particular instrument or class of instruments may or shall be signed. Any signing officer may affix the corporate seal to any instrument requiring the same.”

This is a standard clause that can be found in a by-law. This clause provides that any one officer or director can sign agreements on behalf of the Corporation. This clause also provides that the Board may from time to time determine any other person to have authority to execute agreements. The second clause is very important because it allows for a broader form of approval. The paragraph above provides that the directors may approve something other than any officer or director approving an agreement. For instance, they could have an employee sign the agreement on behalf of the Corporation if they wished. This approval would be acceptable as long as the directors approved this change from the provisions located in the by-law.

If there is no clause in the by-law that provides for the directors to determine from time to time who can sign, then the directors must abide by the execution of instruments clause that is there. See below for an example.

“Execution of Instruments – Deeds, transfers, assignments, contracts, obligations, certificates and other instruments may be signed on behalf of the Corporation by any two officers or directors of the Corporation.”

In the above case, if the by-law provides for the following, then two officers and directors must sign any agreement, contract, etc. on behalf of the Corporation and this clause cannot be varied unless the directors and shareholders approve an amendment to the by-law.

Below are examples of approval resolutions which determine who can sign and deliver an agreement on behalf of a company.

EXAMPLE 1: “Any officer or director of the Corporation is hereby authorized to execute and deliver the Agreement on behalf of the Corporation.”

EXAMPLE 2: “John Doe is hereby authorized to execute and deliver the Agreement on behalf of the Corporation.”

Catchall Phrase in a Directors Resolution to Approve an Agreement

The final clause in a directors resolution to approve an agreement is the catchall phrase. This gives the authorized signing authority the right to execute all other ancillary documents that may be required to implement the transaction contemplated by the Agreement. Below is a catchall phrase:

“Any officer or director of the Corporation be and is hereby authorized and directed to do all acts and things and to execute or cause to be executed all such instruments, agreements and documents as in his opinion may be necessary or desirable to complete the transactions contemplated herein.”

Below is an example of a resolution providing for approval of an agreement that has not yet been signed. Note that the paragraph at the bottom below the resolution refers to a statute. This statute reference should be changed to show the statute refer for the particular company you are preparing the resolution for.

How to prepare a Directors Resolution to Approve an Agreement AFTER it is signed

Below is an example of a resolution providing for approval of an agreement that has already been signed. Resolutions that are approved after they are signed are “approved, ratified and confirmed“.

23 Oct 2013

Ontario Certificate of Status

by Holly Crosgrey | posted in: Certificates of Status and Good Standing, Ontario, Ontario Business Corporations Act | 0

What determines whether an Ontario company or a foreign company licensed in Ontario is in good standing and can obtain a favourable Ontario Certificate of Status?

In order for a company to obtain a favourable Certificate of Status the factors taken into consideration by the government are:

– the status of the company’s Ontario Annual Return filings required pursuant to the Corporations Information Act (Ontario), and

– the status of the company’s T2 Corporation Information Tax Return filings required pursuant to the provisions of the Income Tax Act (Canada).

Relationship of Ontario Annual Return Filing Requirement and an Ontario Certificate of Status

Ontario corporations incorporated pursuant to the Business Corporations Act (Ontario) and foreign business corporations licensed to carry on business in Ontario pursuant to the Extra-Provincial Corporations Act (Ontario) are required to file their Ontario Annual Return with Canada Revenue Agency within six months after the end of each tax year.

Ontario Share Corporations are required to file a Schedule 546 together with their T2 Corporation Information Tax Return.

Foreign business corporations are required to file Schedule 548 together with the C2 Corporation Information Tax Return.

The Ontario government is very lenient about these filings in comparison to most other provinces and territories. It will allow a company to be behind in its Ontario Annual Return filings and T2 Corporation Information Tax Return filings for three or more years before it will dissolve a company. It will also provide the company with adequate warning if its charter is going to be cancelled.

A Certificate of Status will be able to be obtained for an Ontario corporation as long as the company has not been dissolved for the above-referenced filings or it has not violated any of its registration statute requirements.

However, if the company does not make its filings eventually it will be dissolved. Once the company is dissolved it is no longer in good standing and a favourable Ontario Certificate of Status will not be issued if requested.

If a company is required to provide a bank, solicitor or supplier with a clear Certificate of Status and its company has been dissolved, the company will need to be revived which can be very costly.

You can obtain an Ontario Certificate of Status for a company by requesting same from a Canadian search and registration service.