On March 29, 2021 and June 1, 2021, changes to the Business Corporations Act (Alberta) (ABCA) and the Partnership Act (Alberta) (PA) were proclaimed into force.
The Alberta Government made these changes pursuant to the Red Tape Reduction Implementation Act, 2020 (Alberta) (the RTRI Act). The RTRI Act amends 15 statutes in Alberta, reducing various regulatory requirements and making Alberta a more welcoming jurisdiction to carry on business.
We provide a summary of certain key amendments to the ABCA and the PA below.
Business Corporations Act (Alberta)
The Alberta Government amended the ABCA to remove the residency requirements for directors of Alberta corporations.
Prior to the amendments, the ABCA required that one-quarter of a corporation’s directors be resident Canadians and one-quarter of the directors present at any meeting of the board had to be resident Canadians. By removing the residency requirement, the ABCA now more closely aligns with similar legislation in British Columbia, Prince Edward Island, New Brunswick, Nova Scotia, Nunavut, Quebec, Northwest Territories and Yukon.
The director-residency requirements have long been a focal point for foreign investors looking to acquire target businesses in Canada (often U.S.-based private-equity). It is notable that Alberta now joins British Columbia and Nova Scotia as the only jurisdictions in Canada without director residency requirements that allow incorporation in the form of an unlimited liability corporation (ULC). While outside the scope of this post, ULCs are often preferred investment vehicles for U.S. investors as they are treated as flow-through entities for tax purposes.
Partnership Act (Alberta)
Most jurisdictions in Canada impose filing/registration requirements in connection with the formation of a limited partnership. However, Alberta’s requirements have traditionally been more onerous compared to other jurisdictions.
In Alberta, a limited partnership is not legally formed until a certificate substantially complying with subsection 52(3) of the PA is filed with, and recorded by, the Registrar (the Certificate of LP). Under the prior statutory regime, the preparation and filing of the Certificate of LP had a couple meaningful implications:
- businesses typically incurred additional legal costs to prepare a Certificate of LP (which could be substantive in terms of length/depth and was most-typically prepared by legal counsel); and
- the Certificate of LP filed with the Registrar was publicly available on request, which meant that the information provided pursuant to subsection 52(3) of the PA (name and address of each partner, capital contributions, etc.) was effectively disclosed to any interested party.
The RTRI Act amends the information required in a Certificate of LP. Going forward, the only information that will be required in a Certificate of LP is: (a) the name of the limited partnership; (b) the name, email address, and street or postal address of each general partner; and (c) any other information required by the regulations.
Although the provincial cabinet can make regulations with additional registration requirements, no such regulations have been established. The current amendments and lack of regulations represents a material reduction in the disclosure requirements for limited partnerships formed in Alberta. Overall, the amendment allows limited partnerships to form more easily and to better maintain their confidentiality.
Should you require assistance with entity incorporation or formation in Alberta, please reach out to the authors or a member of our corporate/commercial team.
This article is of a general nature only, is not exhaustive of all possible legal rights or remedies and is only current to the date it was posted. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.