Corporate Continuance FAQs (Frequently-Asked Questions)
Contact our law firm for your corporate legal work at 403-400-4092 / 905-616-8864 or Chris@NeufeldLegal.com
What is the legal effect of a continuance on the corporation's existing debts, liabilities, and contractual obligations?
A continuance does not create a new legal entity; therefore, the corporation remains liable for all obligations and debts incurred prior to the transfer. All existing property, rights, and interests continue to be vested in the corporation, and any ongoing legal proceedings may be continued as if the transition had not occurred.
Does a corporation need to obtain export authorization from its current jurisdiction before it can apply for import into the new jurisdiction?
The corporation must first obtain a "Letter of Satisfaction" or formal authorization to export from its current home regulator before the new jurisdiction will accept the application (note: the specific requirements vary between jurisdictions). This ensures the corporation is in good standing and has cleared any administrative hurdles in the originating province or federal registry.
How does a continuance impact the corporation’s original date of incorporation for the purposes of historical record-keeping and seniority?
While the new jurisdiction issues a Certificate of Continuance, the corporation’s original date of incorporation is preserved and recognized in the new articles. This continuity is vital for maintaining the history of the entity and ensuring that long-term contracts tied to the original formation date remain valid.
Are there specific corporate benefit or solvency tests that must be satisfied under the respective statutes before a continuance can be approved?
Statutes generally require directors to declare that the continuance will not result in the corporation being unable to pay its liabilities as they become due. Directors must act in the best interests of the corporation, ensuring that the move does not jeopardize the rights of creditors or the solvency of the business.
What level of shareholder approval is required to authorize the filing of Articles of Continuance, and are there dissent rights available to minority shareholders?
Continuance typically requires approval by a special resolution, which generally means a two-thirds majority of the votes cast by shareholders. In many Canadian jurisdictions, shareholders who disagree with the move may exercise "dissent rights," requiring the corporation to purchase their shares at fair market value.
Following a continuance, is the corporation required to adopt new by-laws, or do the existing by-laws remain in effect to the extent they are consistent with the new legislation?
Existing by-laws often remain in effect to the extent they do not conflict with the mandatory provisions of the new jurisdiction's corporate statute. However, it is best practice to repeal and replace the by-laws immediately upon continuance to ensure full alignment with local legislative requirements.
What are the immediate post-continuance filing requirements regarding the registered office address and the composition of the Board of Directors?
Once the Certificate of Continuance is issued, the corporation must file a notice of registered office, a notice of directors and a notice of agent for service within the new jurisdiction (note: the specific notices required can vary between jurisdictions). Failure to update these government records promptly can lead to administrative non-compliance and issues with the public record.
How does moving between jurisdictions affect the director residency requirements, particularly when transitioning to or from the federal CBCA?
While the federal Canada Business Corporations Act still mandates that at least 25% of directors be resident Canadians, many provincial jurisdictions, including Ontario, Alberta, and British Columbia, have entirely abolished these residency requirements. Consequently, a corporation continuing from the federal level into one of these provinces gains the flexibility to appoint an entirely non-resident board of directors, provided they appoint a local agent for service where required by provincial law.
What is the impact of a continuance on the corporation's standing with the Canada Revenue Agency and its existing Business Number?
A corporate continuance does not generally change the corporation’s federal Business Number or its tax accounts with the Canada Revenue Agency. The corporation remains the same taxpayer for income tax and GST/HST purposes, though it may need to register for new provincial tax accounts in the target jurisdiction.
In what circumstances would a Certificate of Discontinuance be issued by the exporting jurisdiction, and why is this document critical for the transition?
The exporting jurisdiction issues a Certificate of Discontinuance only after receiving proof that the corporation has been successfully continued elsewhere. This document officially "closes the file" in the old jurisdiction, preventing the corporation from being dual-registered and subject to conflicting sets of corporate laws.
At Neufeld Legal, our law firm works with corporations looking to continue into alternate jurisdictions for a variety of business reasons, given that most corporate continuances require the engagement of legal counsel to complete the required paperwork for submission to the appropriate governments' corporate registries (i.e., as legal opinions can only be conferred by lawyers); so if you are looking to continue your company into an alternate jurisdiction, contact us at 403-400-4092 [Alberta], 905-616-8864 [Ontario] or via email at Chris@NeufeldLegal.com.
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