What Are Corporate Resolutions In Alberta?
Corporations conduct business. As part of their specific business, they have employees to do the work associated with that business. While management oversees the employees, directors and shareholders make decisions as to the big picture directions a company will take. Corporate resolutions are the written decisions that shareholders and directors make for the company. Corporate resolution lawyers draft the resolutions so that they properly reflect these decisions. The corporate resolution lawyers at Kahane Law Office, in Calgary, Alberta, are available to help at 403-225-8810.
Are Resolutions Just For Big Companies?
NO! As set out below, corporate resolutions are not just for big companies. All incorporated businesses in Alberta are required to have these both annually and periodically depending on what is happening with the corporation at any specific time. For example, even a small business cannot borrow funds without a resolution approving the loan. Even if you are the only director and shareholder, your business will require corporate resolutions. It is the law.
What Corporate Resolution Lawyers Do In Alberta
Corporate resolution lawyers are corporate lawyers who draft the documents that demonstrate the intentions of the shareholders and directors for companies. As part of this process, they must know they types of resolutions needed, the way of properly drafting them and the person or people required to pass that resolution. Consequently, it is a corporate resolution lawyers job to guide a company to make sure that it is meeting its legal requirements.
Legal Requirements In Alberta
Under the Business Corporations Act, there are certain resolutions required by law in the Province of Alberta. This is why it is a good idea to have a law firm as your registered corporate office (corporation registered office video information). Most important, failing to follow the requirements, the company may lose its ability to do business, face shareholder disputes, face tax consequences and more. Be sure to talk to your corporate resolution lawyer to make sure that your business is in compliance with Alberta law.
Two Types Of Corporate Resolutions
While a company makes many decisions each year, there are two types of corporate resolutions that are needed for corporations. Both types of resolutions are needed in different situations and for different matters. For example, the two broad types of resolutions are:
Corporate Shareholder Resolutions
A shareholders’ resolution is a one that is voted on and passed by the shareholders of a corporation. The most common is the annual shareholder resolution. The shareholders are the owners of the company. The owners have specific resolutions that they must pass each year under Alberta law. These maters are part of the decisions voted on at the annual shareholders’ meetings. There are also specific resolutions that the shareholders must pass for one off situations. For example, the following types of shareholder resolutions include:
- an Annual shareholder resolution adopting the financial statements;
- the Annual shareholder resolution appointing auditors;
- an Annual shareholder resolution waiving the requirement for auditors;
- any Annual shareholder resolution appointing bankers;
- the Annual shareholder resolution appointing directors; and lastly
- Resolution approving the sale of the company’s major assets.
Corporate Director Resolutions
Similarly, directors’ resolutions, as the name suggest, represent a decision made by the directors of the corporation. The shareholders of the company appoint the directors each year. The director then serves for a year, or more when applicable, term. Consequently, resolutions made by directors include a resolution passing:
- a dividend to shareholders;
- approving the payment of bonus;
- a change of the cooperate registered address;
- approving the payment of bonus;
- authorizing the borrowing of funds; and lastly
- appointing officers of the corporation.
Failing To Pass And Draft Proper Resolutions
Many clients routinely fail to maintain their minute books. This includes recording the votes and decisions made by shareholders and directors. Often, this discovery appears in the middle of an important transaction. Unfortunately, with many things legal, clients save time and money keeping paperwork up to date. Failing to properly pass, and then paper a resolution, often includes sever consequences. Most important, these sometimes include personal liability. However, most improperly passed resolutions only impact the company. For example, the consequences include:
- Loss of a taxable benefit such as a divided becoming income;
- Inability or delayed ability to borrow funds;
- Delayed ability or the loss of ability to sell the business;
- Ability to prove ownership of the corporation; and lastly
- Costly shareholder disputes.
Locating A Corporate Resolution Lawyer In Calgary, Alberta
Proper decision making protects companies. They save money and time by regularly maintaining your corporate documents. Make sure your corporation is following the law in terms of its filing and minute book requirements. The corporate resolution lawyers at Kahane Law Office in Calgary help with your corporate resolution legal needs. Feel free to reach us toll-free at 1-877-225-8817 (or 403-225-8810 locally in Calgary, Alberta), or email us directly here.