Written by Reed Boothby
JD Candidate 2023 | UCalgary Law
On May 31, 2022, amendments to the Alberta Business Corporations Act (“ABCA”) came into force. In line with Alberta’s Recovery Plan, the intention underlying the amendments is to attract investment and make Alberta a more appealing jurisdiction for incorporation. Three key benefits as a result of these amendments include: (1) streamlined administrative processes; (2) enhanced director and officer protections; and (3) corporate opportunity waivers.
The recent amendments to the ABCA make Alberta a more attractive jurisdiction in which to incorporate and operate a business by: (1) streamlining administrative processes; (2) enhancing director and officer protections; and (3) introducing a corporate opportunity waiver.
Note that a corporation's constating documents may require amendments to implement some of the changes outlined in this post. For assistance with amending constating documents, or for further information about the ABCA generally, please contact the BLG Business Venture Clinic.
 Business Corporations Act (Alberta), RSA 2000, c B-9. [ABCA]
 ABCA, s. 139.
 ABCA, s. 141.
 ABCA, s. 1(w).
 ABCA, s. 1 (ii).
 “non-reporting issuer” means a private corporation that is not required to file continuous disclosure documents pursuant to National Instrument 51-102 – Continuous Disclosure Obligations (NI 51-102).
 ABCA, s. 141(2.1).
 ABCA, s.134(1.1).
 ABCA, s. 48(7.1)
 ABCA, s. 158(1).
 ABCA, s. 255(5).
 ABCA, s. 208(1).
 ABCA, s. 123(3)(b).
 ABCA, s.124.
 ABCA, s. 16.1.
By Martika Ince | JD Candidate 2024, UCalgary Law
A social enterprise, or a benefit corporation, is one that pursues primarily social or environmental goals through an entrepreneurial structure. As social entrepreneurship gains popularity in Canada, it is crucial for entrepreneurs to be aware of and understand their options in structuring their business. This provides a brief overview of three different legal structures for those who are starting to think about how to organize their social enterprise.
Registered charities are organizations that have a charitable purpose and devote their resources for charitable activities. The Income Tax Act (ITA) provides that organizations can become a registered charity after applying and being approved by the Canada Revenue Agency (CRA). The charitable purpose must fall into one or more of the following categories:
· The relief of poverty;
· The advancement of education;
· The advancement of religion; or
· Other purposes that benefit the community.
Registered charities benefit from a general tax exemption under the ITA. As a charity, you are also able to issue charitable donation tax receipts so that donors can claim tax credits or deductions for charitable gifts.
Registered charities can generate revenue in two ways:
However, carrying on an unrelated business activity is grounds for revocation of charitable registration. This is an important consideration in deciding whether registered charity status is right for your social enterprise, as this rule can severely limit the organization’s activities. Moreover, you may face difficulty in securing private investment as a charity. Venture capitalists and other investors are often less motivated to invest funds to support a social benefit activity that may generate a lower return than pure for-profit entities.
Another structure often used for a social enterprise is a non-profit organization, which has a social benefit purpose and does not operate for profit. You can choose to operate as a non-profit after incorporating into a corporate structure. Non-profits are typically organized as a non-share capital entity to alleviate the concern that owners and shareholders are accumulating wealth. As such, third parties cannot invest in the same way they would with a share capital corporation.
Non-profits are exempt from paying income tax, but they must fulfil certain requirements to do so. A non-profit organization can generate revenue if the business is connected to its social mission. The CRA may revoke a non-profit’s tax-exempt status if it is found to carry out trade or business exclusively with a view to profit.
The following may indicate that a non-profit is operating for profit:
· Trade or business operating in a normal commercial manner;
· Goods or services are not restricted to members and their guests;
· Operated on a profit rather than cost-recovery basis; or
· Operated in competition with taxable entities carrying on the same trade or business.
In some cases, generating profit to be directed to a social benefit purpose can be considered a for-profit activity by the CRA, rendering the organization ineligible for the tax exemption. As such, non-profit organizations are limited in the ways that they can make money.
Corporations are arguably the most flexible vehicle for carrying on social enterprise. A business corporation or for-profit corporation is a legal entity that exists separately from its owners – it is treated as a natural person. Corporations can be incorporated under the Canada Business Corporations Act (CBCA) federally or under the provincial equivalents. In order to indicate your corporation is a social enterprise, you should include your social mission in your articles of incorporation or in a resolution passed by the executive board or shareholders.
The benefits of choosing a business corporation for your social enterprise are many. You can conduct any business activities, collaborate with anyone you wish, and use the proceeds with more freedom. Business corporations also have a flexible capital structure, which can attract private investment with no formal limit on returns. If desired, share conditions can be used to establish a set percentage of earnings that will be directed to the social mission, and formal restrictions can be placed on shareholder returns.
There are also disadvantages to consider in choosing the appropriate legal structure for your business. As corporations are not a qualified donee under the ITA, they cannot attract funding from the charitable sector. They also do not benefit from a tax-exempt status under the ITA. However, corporations can deduct a percentage of their annual income on account of charitable donations. Another disadvantage is that corporations can be perceived by the public as using the cover of a social purpose to create wealth and benefit themselves. It is important to be transparent about how your social enterprise contributes to a social or environmental goal.
Many legal structures exist for a business, but registered charities, non-profit organizations, and business corporations are the most commonly used for a social enterprise, each with their respective benefits and disadvantages. If you have questions or require additional information about different legal structures for your social enterprise, please reach out to the BLG Business Venture Clinic.
 Innovation, Science and Economic Development Canada, “Start, build, and grow a social enterprise: Build your social enterprise” (26 November 2021), online: Government of Canada, <https://ised-isde.canada.ca/site/choosing-business-name/en/start-build-and-grow-social-enterprise-build-your-social-enterprise#s2> [ISED].
 Income Tax Act, RSC 1985, c 1 (5th Supp) [ITA] at s 149(1)(f).
 Susan Manwaring & Andrew Valentine, “Social Enterprise in Canada”, The 2012 Lexpert (Thomson Reuters Canada Ltd, 2012) [Manwaring].
 Manwaring, supra note 4.
 ITA, supra note 3 at s 149(1)(l).
 ISED, supra note 1.
 Manwaring, supra note 4.
 ISED, supra note 1.
 Manwaring, supra note 4.
Are you in a Partnership?
Written by Charlotte Kelso
JD Candidate 2024
A partnership is a relationship between two or more people (i.e., partners) carrying on a business together with the aim of making a profit, excluding corporations. A firm of any size in any industry can be classified as a partnership if it meets this definition. There are three types of partnerships: ordinary partnerships, limited partnerships, and limited liability partnerships. This article focuses on ordinary partnerships, which I will refer to simply as "partnerships". In Alberta, the Partnership Act governs partnerships, with similar legislation in place across Canada.
The key risk associated with partnerships is that a partner may be personally liable for any debt or obligation that the firm is liable for. For example, if the firm is in default of a bank loan, the bank can recover the debt from the partners' personal funds and assets if needed. Liability is shared amongst partners. This means that an individual partner is financially responsible for the actions and decisions of the other partners during the course of business. Given the liability risks, it is important to know if you are in a partnership.
Identifying a Partnership
To be a partnership, a business relationship between parties must meet the definition of a partnership. There are three “essential ingredients” of a partnership. First, the parties must carry on a business. Carrying on a business includes the early and preparatory stages of a venture. The duration of the business venture does not need to pass any certain threshold. Second, the business must be carried on “in common” by the parties. In other words, they must be carrying out the same business in tandem. Finally, the business must be carried on with the aim of making a profit. Aiming to make a profit does not require that the firm actually make a profit.
Whether the “ingredients” are present is determined by looking at the circumstances and facts of the relationship. Materials like business licences in the partners’ names, correspondence between the parties, and tax returns showing shared profits can point to a partnership. The parties may have an agreement in writing that they have formed a partnership. While this can be indicative of a partnership, it is not necessarily decisive. A lack of evidence that the parties intended to divide profits or carry on a business together suggests that there is no partnership. Where there is no written agreement, words and actions that are consistent with a partnership may establish a partnership. In sum, a partnership is identified based on the circumstances of each business relationship.
Converting the Partnership to a Corporation
Partnerships often represent a phase in the legal structure of a business which parties may eventually wish to transition out of, especially given the liability risks of a partnership. The Income Tax Act provides an avenue for a partnership to convert to a corporation in conjunction with the wind-up process. First the partners set up a corporation for the purposes of the transition. Then the partnership transfers property to the corporation in exchange for shares. The shares are transferred from the partnership to the individual partners. Then the partnership wind-ups up. The former partners continue on their business venture under the corporation as shareholders.  
 Partnership Act, RSA 2000, c P-3, at s. 1(g).
 Ibid at s. 1(c).
 Ibid at s. 11(2) and 15.
 Spire Freezers Ltd v Canada, 2001 SCC 11.
 Miah v Khan,  1 WLR 2163.
 Supra note 2.
 Supra note 2.
 Sproule v McConnell (1925),  1 DLR 982, 19 Sask LR 319.
 Big Bend Construction Ltd v Donald, 1958 CarswellAlta 33, 25 WWR (ns) 281.
 Sabbaugh v Rawdah, 1978 CarswellAlta 409, 16 AR 326.
 Income Tax Act, RSC 1985, c 1, s. 85(2).
 Tingle, B. C. Start-Up and growth companies in Canada - a guide to legal and business practice (3rd ed.). LexisNexis Canada Inc, p. 36.
Blog posts are by students at the Business Venture Clinic. Student bios appear under each post.