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If you have incorporated a business in British Columbia, you may be wondering what your obligations are after the incorporation process is completed. Incorporating a business is not a one-time event, but rather an ongoing responsibility that requires you to comply with various laws and regulations that govern your business activities. Corporations also carries an ongoing expense maintaining the corporation in good standing, so you want to first check with a business lawyer if a corporation is the best vehicle for achieving your business goals.
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In this article, we outline some of the main post-incorporation obligations that you have under the British Columbia Business Corporations Act, which is the primary legislation that regulates the formation, operation, and dissolution of corporations in the province.
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Filing An Annual Report
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One of the most important post-incorporation obligations that you have is to file an annual report with the registrar of companies within two months after each anniversary of the corporation’s date of recognition. The date of recognition is the date when the corporation was recognized by the registrar, which is usually the same as the date of incorporation. The annual report contains information required by the act and regulations, such as the name and address of the corporation, the names, and addresses of its directors and officers, and date of the corporations last annual general meeting, etc. The annual report also serves as a confirmation that your corporation is still active and in good standing. An annual filing fee is also prescribed for filing the annual report and failure to file the report on time may lead to the application of a late filing penalty and the corporation may be dissolved by the registrar.
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Maintaining Corporate Records
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Certain records must be maintained at the corporation’s records office, which is the place where the corporate documents are kept, and the corporation can be contacted by the registrar, the government, or the public. The records office can be the same as your registered office, which is the official address of your corporation, or it can be a different location in British Columbia. The records that you must maintain at your records office include the following:
The notice of articles, a document containing the basic information about the corporation, such as its name, share structure, and registered office.
The articles, which are the rules that govern the internal affairs of the corporation, such as the classes of shares, rights and obligations of the shareholders, directors, and officers, the procedures for meetings and resolutions, the distribution of profits and losses, etc.
The minutes of meetings and resolutions of shareholders and directors, which are the records of the decisions and actions taken by the owners and managers of the corporation.
The register of shareholders, a list of the names and addresses of the people who own shares in the corporation, and the number and class of shares they hold.
The register of directors, a list of the names and addresses of the people who manage the corporation, and the date when they became or ceased to be directors.
The register of transfers, which is a record of the changes in the ownership of shares in the corporation, such as the date, name, and number of shares transferred.
The financial statements, which are the reports that show the financial performance and position of the corporation, such as the income statement, the balance sheet, the cash flow statement, etc.
Any other records that are required by the act or the regulations, such as the certificates, the transparency register, the consent forms, etc.
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Copies of the annual reports must be kept, and any other necessary records to explain the corporation’s financial transactions and position. Records must be kept in a form that allows them to be inspected and copied and must retain them for at least seven years after the end of the financial year to which they relate.
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Allowing Inspection and Copying of Records
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One other post-incorporation obligation is ensuring to also allow the shareholders and creditors, and their agents and legal representatives, to inspect and obtain copies of the records kept at the records office, subject to certain exceptions and limitations. For example, the minutes of directors’ meetings or resolutions, or any records that contain personal, confidential, or privileged information may not be disclosed, unless the person requesting the access has a proper purpose and the disclosure is not harmful to the corporation or any other person. The corporation may also charge a reasonable fee for providing copies of the records, but not for allowing inspection of the records.
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Holding An Annual General Meeting
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Another post-incorporation obligation is the duty to hold an annual general meeting of the shareholders within 18 months after the corporation’s recognition date and subsequently once in each calendar year and not more than 15 months after the last preceding annual general meeting. The annual general meeting is a meeting where your shareholders can exercise their rights and powers, such as electing directors, appointing an auditor, approving the financial statements, amending the articles, etc. Notice of the annual general meeting must be given to the shareholders, directors, and auditor, if any, in accordance with the act and the regulations. The notice must include the date, time, and place of the meeting, and the general nature of the business to be transacted at the meeting. Shareholders must also be provided with the financial statements and the auditor’s report, if any, at least 21 days before the meeting.
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Complying With Other Rules and Obligations
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In addition to the post-incorporation obligations mentioned above, the corporation must also comply with other rules and obligations regarding various aspects of its business, such as the issuance, transfer, and redemption of shares, the declaration, and payment of dividends, the alteration of its share structure, the alteration of your notice of articles and articles, the amalgamation with other corporations, the continuation into or out of British Columbia, the dissolution or liquidation, etc. These obligations may also increase depending on whether the corporation is listed on any of the stock or securities exchanges in Canada, which also requires a more detailed disclosure and reporting requirements. These rules and obligations are prescribed by the act and the regulations, and they may vary depending on the type, size, and nature of the corporation. The corporation must also comply with other laws and regulations that apply to the business activities, such as tax laws, employment laws, environmental laws, consumer protection laws, etc.
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Conclusion
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Incorporating a business in British Columbia is not a one-time event, but rather an ongoing responsibility that requires compliance with various laws and regulations that govern a corporation’s business activities. The post-incorporation obligations under the British Columbia Business Corporations Act are important to ensure the proper functioning and management of the corporation, and to protect the interests and rights of your shareholders, creditors, and the public. Therefore, you should be aware of your obligations and take the necessary measures to fulfill them.
Arcstone Law Corporation assist companies in carrying out a comprehensive review of their compliance needs and providing regulatory filing services to BC incorporated or continuing corporations and societies. We also help businesses initiate a compliance audit in other to test readiness for compliance. You can contact us by email admin@arcstonelaw.com or book a consultation on our website. All legal services are rendered through Arcstone, a law corporation.
Contributor:
Name: 'Bolanle Oduntan*
Title: Managing Lawyer
Email: bolanle@arcstonelaw.comÂ
*practicing through Arcstone Law Corporation
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