We are officially operating under new corporate legislation in the province of Saskatchewan. The Business Corporations Act, 2021, with its regulations, The Business Corporation Regulations, 2022 came into force on March 12, 2023.
Officials have stated that the main purpose behind the amended Act and Regulations is the modernization and streamlining of Saskatchewan’s legislation to reflect current business practices, rules and language, to improve efficiencies and to allow Saskatchewan businesses to grow and compete with their counterparts in other jurisdictions.
This article will examine a few of the highlights of the new Act and does not constitute an exhaustive summary. To see all changes, please review the full text of the legislation.
Summary of the New and Notable
There are certain overarching themes to follow in the new legislation, which will be discussed below; however, other specific examples of ways in which the legislation has been amended are as follows:
- Removal of the requirement for corporations to provide notices and other documents to the Registrar on matters focused solely on the internal business of the corporation.
- Removal of the requirement and cost to publish certain corporate events in the Saskatchewan Gazette.
- Removal of the existing 25% Canadian residency requirement for directors, which brings Saskatchewan in line with other jurisdictions and will serve to increase business opportunities in the province.
- Corporation names may now be registered in Cree, Dene, Michif, Lakota, Nakota, Dakota, or Salteaux or other prescribed language, which may include special characters as set forth in the Regulations.
- Notice of shareholder meetings may be sent by corporations within a shorter time period than the prescribed minimum of 21 days, if so specified in the articles or bylaws. This change will allow businesses to be nimbler in their decision-making.
- Expansion of the definition of “wholly owned subsidiary”, which results in changes to short-form amalgamations.
- Expansion of the reasons individuals may be disqualified from acting as a director of a corporation, which now include conviction of an offence in connection with the promotion, formation or management of a corporation or unincorporated business, or of an offence involving fraud (with certain exceptions).
- Incorporation of the requirement introduced by The Business Corporations Amendments Act, 2020 that corporations maintain a register of “individuals with significant control” and expansion of the disclosure obligations of such register to certain investigative bodies such as the RCMP, police services and CRA.
Documents Records and Signing
One of the main themes evident in the new legislation is the allowance of the use of electronic technology. The Act now expressly states that (for the most part) the word “document” includes information that is submitted in an electronic form and the word “signed” includes electronic signatures.
With some exceptions and requirements, notices, records and documents are now permitted to be sent to and served on shareholders, directors and corporations in electronic form. Similarly, waivers of notice, statutory declarations and affidavits may also be created or provided in electronic form.
We now have explicit confirmation that all registers and other records required to be maintained by a corporation may be entered and stored electronically so long as the corporation is able to reproduce the records in an intelligible written form within a reasonable time. Further, the new Act effectively codifies that electronic minute books satisfy all legislative requirements with respect to record-keeping. As such, businesses and law firms no longer need to waste shelf space with physical minute books.
While all of the above-mentioned changes regarding use of electronic technology are certainly welcome, many businesses and law firms were already operating in this space. For the most part, the provisions reflected in the legislation serve to bring the legislation in line with current practices rather than offering corporations inventive ways to do business.
One addition that many lawyers were hoping to see was an allowance for electronic share certificates. While a provision permitting electronic certificates is included in the new Act (see Section 7-2(5)), this provision is stated to be carved out as not coming into force with the rest of the Act on March 12th. It would be interesting to hear the reasons why this provision was exempted, but the hope is that this section comes into force in the very near future.
Meetings and Voting
The modernization of the Act is also reflected in provisions relating to shareholder meetings. The new legislation adds that (unless the bylaws otherwise provide) any person entitled to attend a meeting of shareholders may participate in such meeting by electronic means and, if participating by such means, is deemed to be present at the meeting. The Act further states that (unless the bylaws otherwise provide) a meeting of shareholders may be held entirely by electronic means.
In terms of notice of shareholder meetings, the Act now allows a corporation to post a notice of meeting of shareholders and relevant records on a website or internet file-hosting service that can be accessed by shareholders (with no fee payment). A corporation must send notice of such posting to shareholders with a direction for access, and may send such a notice by electronic means if (among others), a shareholder has consented to receiving such notice by electronic communication or the articles of the corporation provide that such notices may be sent by electronic communication.
Further, unless the bylaws otherwise provide, anyone participating in a meeting of the shareholders via electronic means may also vote at such meeting of shareholders by electronic facilities that the corporation has made available for that purpose.
The Act provides similar provisions regarding director meetings. Directors may (subject to the bylaws) participate in meetings of directors by electronic means and confirms that participation in a meeting of directors by such means is deemed to be present at such meeting.
Access to Records
The new Act confirms that right of directors and shareholders and their agents to examine certain records of a corporation or receive a list of shareholders is met by a corporation providing access to an electronic copy of the record or list. Corporations are also now permitted to post copies of financial statements in the same manner (and subject to the same requirements) as the notice of meeting of shareholders as detailed above.
Room For Improvement
While the amendments reflected in the new legislation are welcome, the province unfortunately didn’t go far enough to ensure that Saskatchewan is able compete on even par with other jurisdictions. For example, we still lag behind jurisdictions such as Alberta, which recently modernized its legislation with updates such as the following:
- Reducing of the threshold approval for a written shareholder resolution and for the dispensing with an auditor from unanimity to at least two-thirds approval.
- Expanding the circumstances constituting grounds for a good faith defense by directors and enhancing indemnification provisions, which afford greater protections for directors and officers.
- Permitting a corporation to waive its interest in certain corporate opportunities in order to allow its officers, directors or shareholders to separately participate in those opportunities without violating their fiduciary duty to the corporation.
It will remain to be seen if the failure to include these types of provisions has any real impact, but it seems that the province missed an opportunity to have a greater positive impact on legislation relating to Saskatchewan businesses.
As noted above, several of the new provisions that can be utilized by corporations may require amendment to the articles and/or bylaws of the corporation or may require the corporation to obtain specific consent. Please contact the lawyers at Lakefield LLP to learn more about the new legislation and what your corporation may need to do to take advantage of the new provisions.
The information in this article does not constitute legal advice. The law may have changed since this article was first published. You should consult with your lawyer to confirm the current state of the law and obtain advice specific to your situation.