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Provincial vs. Federal Incorporation: Choosing the Right Path for Your Business

4/3/2025

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Written by Mohamed Barre
JD Candidate 2026 | UCalgary Law

That spark of an idea, the vision of your own business – it's exhilarating! But then reality hits: incorporation. Suddenly, you're navigating a maze of provincial vs. federal, ABCA vs. CBCA, and a mountain of forms. Feeling overwhelmed? You're not alone. Choosing the right incorporation path is crucial, and today, we're cutting through the confusion. Let's break down the differences between incorporating federally vs. provincially, focusing specifically on the provincial process here in Alberta, and  get you one step closer to launching your dream.
To start, the processes for incorporating under the ABCA and CBCA are substantially similar. In Alberta, the process of incorporation is set out in Sections 5-14 of the ABCA. The ABCA requires three documents:[1]
  1. Articles of Incorporation,
  2. Notice of Address, and 
  3. Notice of Directors. 
Each document must comply with the ABCA. Once the documents and a Newly Upgraded Automated Name Search (NUANS) report are filed with Service Alberta or an accredited registry agent, the information will be vetted for compliance with the ABCA. A NUANS report is used to establish that there are no other corporations with an identical or similar name as your proposed corporation name. Additionally, if the corporation were to conduct business in another province, the corporation would need to incorporate extra-provincially in said province. 
Prescribed incorporation fees must also be paid before a certificate of incorporation is issued.[2] Furthermore, pursuant to section 20.1(1) of the ABCA, all corporations are required to: 
  • Appoint an agent for service who is a resident Albertan 
  • Provide the Registrar with a notice of appointment of its agent for service, together with articles of incorporation 
  • Ensure that the address for its agent for service is an office that is accessible to the public during 
The process for federal incorporation is similar to the ABCA and is set out in Sections 5-13 of the CBCA. Federal incorporation also requires filing Articles of Incorporation, Notice of Address, and Notice of Directors.[3]  Under the CBCA, at least twenty-five percent of the directors of a corporation must be resident Canadian. However, if the corporation has less than four directors, at least one must be a resident Canadian. Furthermore, the corporation will also be required to incorporate extra-provincially in the provinces where it conducts business.

1. Fees The cost of provincial incorporation is $275.[4] The cost of federal incorporation is $200 for online applications or $250 for paper applications.[5] Both carry additional fees such as a $45 NUANS report, and a registrar service fee or if using a law firm to incorporate then the fees of their services. 
While incorporating a federal corporation is comparatively less costly in terms of incorporation fees, federal corporations are also required to extra-provincially register in the provinces in which they will carry on business. The definition of “carry on business” triggering the registration requirement encompasses running a business, having an address, post box or phone number, or offering products and services for a profit.[6] This is an additional cost consideration for a business seeking to incorporate federally. The fee to register an extra-provincial corporation in Alberta is $275 plus service fees.[7] 

2. Address The ABCA requires a business to have its registered office in Alberta.[8] The requirement to have a registered office in Alberta is not satisfied by merely having a post office box in Alberta.[9] The requirement is a physical address in Alberta accessible during normal business hours.[10] The ABCA requires shareholder meetings to be held in Alberta unless all shareholders entitled to vote at the meeting agree to hold it outside of Alberta, or if the articles so provide.[11]
The CBCA allows a federally incorporated business to have a registered office and hold annual meetings in any province in Canada.[12]  

3. Filing Requirements The CBCA entails additional paperwork by requiring a corporation to file annual returns.[13] Current annual federal filing fees are $12 (online) or $40 (paper filing).[14] The filing requirements must be completed annually, whether or not there have been director or address changes for the corporation. 
The ABCA also has annual return requirements.[15] These requirements also apply to registered extra-provincial corporations.16 A federal corporation registered in Alberta will have to file annual returns under the ABCA to comply with the statute. A corporation operating in Alberta has more onerous filing requirements if it incorporated federally as opposed to provincially. 

4. Name Protection
Federal incorporation allows a business to use its corporate name across Canada.[16] This degree of name protection can only be defeated by a trademark. Federal name searches are therefore more rigorous than provincial name searches. 
Provincial incorporation only allows a business to use its corporate name in Alberta, and a corporation will need to conduct a name search in each additional province in which it wishes to carry on business. There is a risk that its corporate name will be rejected in another province, requiring the use of an alternative name. 

5. Privacy
Corporations Canada maintains a register of the Registered Office Address, Directors, Annual Filings, and Corporate History of federal corporations, publicly available online at no cost.[17]  Provincial corporations have relative privacy with respect to the accessibility of their corporate data, as such information from provincial corporations is not publicly available online, and a fee is required for a search.  


[1] ABCA, ss 6-7, 20, 106.

[2] Service Alberta, “Incorporate an Alberta Corporation” (2023), online: Government of Alberta <https://www.alberta.ca/incorporate-alberta-corporation.aspx>.

[3] CBCA, ss 7, 19, 106.

[4] Open Alberta, “Registry agent product catalogue” (2023), online: Government of Alberta <https://open.alberta.ca/publications/6041328>.

[5] Corporations Canada, “Services, fees and turnaround times – Canada Business Corporations Act” (2020), online: Government of Canada <https://corporationscanada.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06650.html>.

[6] Corporations Canada, “Steps to Incorporating” (2020), online: Government of Canada <https://corporationscanada.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06642.html#toc-06>.

[7] Service Alberta, “Registry agent product catalogue” (2020), online: Government of Alberta <https://open.alberta.ca/publications/6041328>.

[8] ABCA, s 20.

[9] ABCA, s 20(4).

[10] ABCA, s 20(6).

[11] ABCA, s 131.

[12] CBCA, ss 19(1), 132.

[13] CBCA, s 263.

[14] Corporations Canada, “Services, fees and processing times – Canada Business Corporations Act” (2020), online: Government of Canada < https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06650.html >.

[15] ABCA, s 268. 16 ABCA, s 292.

[16] Corporations Canada, “Is incorporation right for you?” (2020), online: Government of Canada <https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06641.html>.

[17] Corporations Canada, “Search for a Federal Corporation” (2020), online: Government of Canada <https://www.ic.gc.ca/app/scr/cc/CorporationsCanada/fdrlCrpSrch.html>.
​
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Should You Extra-Provincially Register Your Company?

1/12/2022

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Should you Extra-Provincially Register your Company?
Written by: Bilal Qureshi

If your Company, which is provincially incorporated in Alberta and wishes to “carry on business” in a province other than Alberta, it may need to be registered in that other province it wishes to “carry on business” in.  This is called an extra-provincial registration.
 
What does “carry on business” mean?
Each province has its own statute defining what “carry on business” means, which will determine whether your Company is required to extra-provincially register in that other province. For example, in British Columbia, the governing statute to determine what “carrying on business” means is defined in the Business Corporation Act (“BCA”). The BCA requires that foreign entities be registered as an extra-provincial company in accordance with the BCA within two months after beginning to carry on business in British Columbia.[1] A foreign entity is defined as “a foreign corporation or a limited liability company”.[2] Pursuant to the BCA, a foreign entity is deemed to carry on business in British Columbia if:
  1. it is listed in a telephone directory;
  2. appears or is announced in any advertisement in which an address or telephone number in British Columbia is given for the foreign entity;
  3. it has a resident agent in British Columbia;
  4. it has a warehouse, office or place of business in British Columbia; or
  5. it otherwise carries on business in British Columbia.[3]

​However, section 375(4) in the BCA provides an exemption for a foreign entity from being registered under the BCA while allowing it to carry on business in British Columbia.[4] The foreign entity may do so if it does not maintain in British Columbia a warehouse, office or place of business under its own control or under the control of a person on its behalf.[5]           
 
Each province will have different requirements for what “carrying on business” means. For example, unlike in British Columbia, Quebec and the Quebec’s Act Respecting the Legal Publicity of Enterprises considers companies to be “carrying on business” in Quebec if it has representatives in Quebec for the purpose of making profit.[6]
 
Contact Us!
To avoid unnecessary fees and penalties, it is better to be proactive in determining if your company requires to be registered extra-provincially. Please feel free to contact the BLG Business Venture Clinic for further information!

Bilal Qureshi is a member of the BLG Business Venture Clinic and is a 2rd year student at the University of Calgary Faculty of Law

[1] Business Corporations Act, SBC 2002, c 57. at s 375(1).
[2] Ibid at s 1.
[3] Ibid at s 375(2).
[4] Ibid at s 375(4).
[5] Ibid.
[6] Act respecting the legal publicity of sole proprietorships, partnerships and legal persons, CQLR c P-45, s 21(4).
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Location is Everything - Choosing Where to Incorporate

1/5/2020

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Location is Everything - Choosing Where to Incorporate

So you’ve made the decision that incorporation is right for your business, but there’s another critical incorporation decision ahead – where do you incorporate? In Alberta, incorporation is governed by the Business Corporations Act (the “ABCA”).[1] Federal incorporation is governed by the Canada Business Corporation Act (the “CBCA”).[2] There are a number of factors differentiating provincial and federal incorporation to guide your decision.
Fees
The cost of provincial incorporation is $275 plus service fees.[3] The cost of federal incorporation is $200 for online applications or $250 for paper applications.[4]
While incorporating a federal corporation appears less costly in terms of incorporation fees, there is an additional cost consideration for a business seeking to incorporate federally – federal corporations are also required to extra-provincially register in the provinces in which they will carry on business. The definition of “carry on business” triggering the extra-provincial registration requirement includes running a business, having an address, post box or phone number, or offering products and services for a profit.[5] The fee to register an extra-provincial corporation in Alberta is $275 plus service fees.[6]
Address
The ABCA requires a business to have its registered office in Alberta.[7] The requirement to have a registered office in Alberta is not satisfied by merely having a post office box in Alberta.[8] The requirement is a physical address in Alberta accessible during normal business hours.[9] The ABCA requires shareholder meetings to be held in Alberta unless all shareholders entitled to vote at the meeting agree to hold it outside of Alberta.[10]
The CBCA allows a federally incorporated business to have a registered office and hold annual meetings in any province in Canada.[11]
Filing Requirements
The CBCA entails additional paperwork by requiring a corporation to file annual returns.[12] Current annual federal filing fees are $20 (online) or $40 (paper filing).[13] The filing requirements must be completed annually, whether or not there have been director or address changes for the corporation.
The ABCA has its own annual return requirements.[14] These requirements also apply to registered extra-provincial corporations.[15] A federal corporation registered in Alberta will have to file annual returns under the ABCA to comply with the statute. A corporation operating in Alberta has more onerous filing requirements if it incorporated federally as opposed to provincially.
Name Protection
Federal incorporation allows a business to use its corporate name across Canada.[16] This degree of name protection can only be defeated by a trademark. Federal name searches are therefore more rigorous than provincial name searches.
Provincial incorporation only allows a business to use its corporate name in Alberta, and a corporation will need to conduct a name search in each additional province in which it wishes to carry on business. There is a risk that its corporate name will be rejected in another province, requiring the use of an alternative name.
Privacy
Corporations Canada maintains a register of the Registered Office Address, Directors, Annual Filings, and Corporate History of federal corporations, publicly available online at no cost.[17] Provincial corporations have relative privacy with respect to the accessibility of their corporate data, as such information from provincial corporations is not publicly available online, and a fee is required for a search.
Structure
The ABCA permits the establishment of Unlimited Liability Corporations – this is an unusual incorporation structure that makes the liability of shareholders unlimited in extent and joint and several in nature.[18] This structure is not supported by the CBCA.
Prestige
Federal incorporation may have the advantage of prestige from global recognition standpoint, as a Canadian corporation is more recognizable than individual provinces. [19] This is primarily a consideration for businesses intending to operate internationally.
Ultimately, a corporation is not permanently confined to the jurisdiction in which it was originally incorporated. A corporation can choose to change from provincial to federal incorporation, vice versa, or from one province to another, by way of a continuance. Both the ABCA and the CBCA contain provisions allowing corporations from another jurisdiction to effectively re-incorporate under their statute.[20]

For further assistance with incorporating under the ABCA or the CBCA, contact the BLG Business Venture Clinic. We can assist with drafting articles and bylaws to get your corporation set up the right way and avoid costly changes down the road.
 
Ana Cherniak-Kennedy is a member of the BLG Business Venture Clinic and is a second-year law student at the Faculty of Law, University of Calgary.
 
References
[1] RSA 2000, c B-9 [ABCA].
[2] RSC 1985, c C-44 [CBCA].
[3] Open Alberta, “Registry agent product catalogue” (2019), online: Government of Alberta <https://open.alberta.ca/publications/6041328>.
[4] Corporations Canada, “Services, fees and turnaround times – Canada Business Corporations Act” (2017), online: Government of Canada <https://corporationscanada.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06650.html>.
[5] Corporations Canada, “Steps to Incorporating” (2016), online: Government of Canada <https://corporationscanada.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06642.html#toc-06>.
[6] Service Alberta, “Registry agent product catalogue” (2019), online: Government of Alberta <https://open.alberta.ca/publications/6041328>.
[7] ABCA, s 20.
[8] ABCA, s 20(4).
[9] ABCA, s 20(6).
[10] ABCA, s 131.
[11] CBCA, s 19(1).
[12] CBCA, s 263.
[13] Corporations Canada, “Policy on filing of annual returns – Canada Business Corporations Act” (2012), online: Government of Canada <https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs02544.html>.
[14] ABCA, s 268.
[15] ABCA, s 292.
[16] Corporations Canada, “Is incorporation right for you?” (2016), online: Government of Canada <https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06641.html>.
[17] Corporations Canada, “Search for a Federal Corporation” (2019), online: Government of Canada <https://www.ic.gc.ca/app/scr/cc/CorporationsCanada/fdrlCrpSrch.html>.
[18] ABCA, s 15.2(1).
[19] Corporations Canada, supra note 20.
[20] ABCA, s 188; CBCA, s 197.
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Jurisdiction to Incorporation

12/2/2019

1 Comment

 

Jurisdiction to Incorporation

Corporation is a common business form in start-ups. It is adaptable the changing circumstances and it is the only structure that can take advantage of government programs. When incorporating your start-up, the jurisdiction to incorporation must be considered.
 
Where do the powers come from?
The provincial power is explicit, written under s. 92, para. 11 of the Constitution Act, 1867. The paragraph states that each provincial legislative assembly may individually make laws in relation to the incorporation of companies with provincial Objects. The federal power is implicit, mostly stemming from the general power of the federal government under s. 91 of the Constitution Act, 1867 over peace, order and good government.[1] The power of incorporation is implicit in other enumerated federal powers as well, such as navigation and shipping and the trade and commerce clause.[2]
 
The distinction 
Although it has been determined both federal and provincial governments may enact laws regarding incorporation of businesses, the precise distinction between the federal and provincial power has not been fully determined. The provincial legislation has often been seen as more limited, since the constitution grants only the power for the incorporation of corporations having “provincial objects.” However, the limitation that flows from it has been narrowly interpreted.[3] A corporation may incorporate under provincial law even if it carries business that is closely related to an area with federal jurisdiction, such as banking.[4] A corporation under federal jurisdiction may also choose to limit its business to an object or purpose that is of provincial nature.[5]
 
For a start-up business, finances and efficiency should be an important consideration when incorporating. Compared to the federal process, the provincial incorporation process is lower in fees and lawyers would not have to deal with bureaucrats all the way in Ottawa. Many corporate lawyers like to recommend incorporation in the home province of the company and its counsel for these reasons.

Kara Cao is a member of the BLG Business Venture Clinic and is a second-year law student at the Faculty of Law, University of Calgary.

References
[1] John Deere Plow Co. v. Wharton, [1915] A.C. 330
[2] Referece re Dominion Constitutional Act, s. 110
[3] Bonanza Creek Gold Mining Co. v. R., [1916] 1 A.C. 566 
[4] Re Bergethaler Waisenamt, [1949] M.J. No. 42, 29 C.B.R. 189 
[5] Colonial Building and Investment Association v. Quebec (Attorney General) (1883)

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Is a Unanimous Shareholder Agreement Right for My Business

11/24/2019

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Is a Unanimous Shareholder Agreement Right for My Business

There is no “one size fits all” solution available when a new venture requires a shareholder agreement. The question of whether a Unanimous Shareholder Agreement (“USA”) should be used over a conventional shareholder agreement is one that entrepreneurs should consider when the time comes to put a shareholder agreement in place. This question is also likely to spark a debate (although, not a particularly exciting one) among lawyers. This blog post sets out to explain the main differences between USAs and conventional shareholder agreements.
What is a USA?
USAs are a creature of statute. It is imperative that entrepreneurs turn their minds to which statute their business is incorporated under, as this will determine whether their agreement amounts to a USA. The corporate statutes in all provinces except British Columbia and Nova Scotia contemplate the existence of USAs. The Canada Business Corporations Act (“CBCA”) defines a USA as being:
An otherwise lawful written agreement among all the shareholders of a corporation, or among all the shareholders and one or more persons who are not shareholders, that restricts, in whole or in part, the powers of the directors to manage, or supervise the management of, the business and affairs of the corporation....[i]
In contrast, the Alberta Business Corporations Act (“ABCA”) defines a USA as being:
  1. a written agreement to which all the shareholders of a corporation are or are deemed to be parties, whether or not any other person is also a party...
that provides for any of the matters enumerated in section 146(1)....[ii]
These matters include the rights and liabilities of the parties, election of directors, management of the corporation’s business and affairs, or restriction of director powers.[iii] It is worth noting that it is possible to inadvertently enter into a USA by satisfying one of the statutory definitions above. If, for any of the reasons that follow, an entrepreneur does not want to create a USA, the shareholder agreement should explicitly state that it is not meant to be a USA.
How are USAs Different than Conventional Shareholder Agreements?
USAs are unique in that a person can become a party to the USA without signing it. If a USA is in effect when a person acquires a share of the corporation, that person is deemed to be a party to the agreement and will be bound by it.[iv] This means that those who invest in future equity financings carried out by a corporation will be bound by a USA (if one exists).
Another important distinction is the fact that, when the shareholders are exercising powers that have been transferred from the directors, they are subject to the same fiduciary duty attracted by directors in the ordinary course of their business. A consequence of this is that shareholders making decisions in place of the directors will lose their ability to pursue their own interests.[v] Shareholders acting in place of directors pursuant to a USA must act in the best interests of the corporation.[vi] In contrast, shareholders that are a party to a conventional shareholder agreement are free to act in self-interested ways.
Finally, it is often much more difficult to amend or terminate a USA in comparison to a conventional shareholder agreement. For CBCA corporations, it is uncertain as to whether a court would uphold the termination of a USA executed by any fewer than all the shareholders.[vii] The amendment or termination of a USA in the context of ABCA corporations certainly requires the consent of all shareholders.[viii] Termination provisions in conventional shareholder agreements can have a much more relaxed structure.
When Should a USA be Used?
Generally speaking, start-up growth companies should steer clear of USAs; however, there are certain situations in which a USA may be advantageous.
Firstly, a corporation may anticipate a turn of events that will result in a significant amount of its shares being widely held by individual investors – in this situation, a USA would provide an effective means to bind each one of these new shareholders to the terms of the corporation’s shareholder agreement.[ix]
Another situation in which the creation of a USA may be advisable is when a corporation whose shares are held primarily by non-Canadians wishes to be classified as a Canadian Controlled Private Corporation (“CCPC”) for tax purposes. If Canadian resident shareholders possess the right to appoint a majority of the board of directors by virtue of a USA, the corporation will qualify as a CCPC despite the fact its shares may be owned primarily by non-residents.[x]
Again, USAs are often not advisable for use in start-up growth companies mainly due to the fact that both current and future shareholders are bound by them. Conventional shareholder agreements provide a higher degree of flexibility and allow shareholders to consider only their personal interests.

Thomas Machell is a member of the BLG Business Venture Clinic and is a third-year law student at the Faculty of Law, University of Calgary.

References

[i] Canada Business Corporations Act, RSC 1985 c C-44 at s 146(1) [CBCA].
[ii] Business Corporations Act, RSA 2000, c B-9 at s 1(jj) [ABCA].
[iii] Ibid at s 146(1).
[iv] CBCA at s 146(3); ABCA at s 146(2) and 146(3); Note that recourse is available for persons who acquire a share of a corporation that is subject to a USA if they did not receive proper notice of the agreement’s existence.
[v] Bryce C Tingle, Start-up and Growth Companies in Canada, 3rd ed (LexisNexis, 2018) at 103 and 104 [Tingle].
[vi] BCE Inc v 1976 Debentureholders, 2008 SCC 69 at para 37.
[vii] Tingle at 106.
[viii] ABCA at s 146(8).
[ix] Tingle at 107.
[x] Canada v Bioartificial Gel Technologies (Bagtech) Inc, 2013 FCA 164 at para 58.
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Protecting Directors from Civil Liability Through Indemnification

10/7/2019

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Protecting Directors from Civil Liability Through Indemnification

A likely question an entrepreneur may ask themselves early in their venture is “how do I protect the directors of my company?”  They may (or perhaps should) think about this because in all likelihood, they will be one of, if not the only director of their business during its early phases following incorporation. Please note: this post assumes that the company in question is incorporated under the Business Corporations Act of Alberta
 
Indemnifying Directors
Indemnification refers to one party’s agreement to secure another against responsibility for their actions, or to give security for the reimbursement of a person in case of an anticipated loss[1].  In this case, it refers to a corporation’s agreement to make a director whole, should they be subject to legal proceedings as a result of their actions in their capacity as a director of the corporation.
 
Generally speaking, the Business Corporations Act (the Act) allows corporations to indemnify their directors for both legal costs incurred, as well as any monetary damages that arise from a director’s conduct in relation to the business.  In order to benefit from such indemnification, a director must have “acted honestly and in good faith with a view to the best interests of the corporation[2].”
 
An Alberta corporation is not permitted to indemnify its directors for their actions if they have not acted honestly and in good faith with a view to the best interests of the corporation – that is, if they have breached their fiduciary duty to the corporation.  If a director has breached his or her fiduciary duties to the corporation, any indemnity the corporation has offered will be void.
 
The scope of conduct that may be indemnified under the Act is very broad.  Section 124(1) of the Act states:
“…a corporation may indemnify a director or officer of the corporation, a former director or officer of the corporation…against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the director or officer in respect of any civil, criminal, or administrative action or proceeding to which the director or officer is made a party by reason of being or having been a director of that corporation or body corporate…”
 
When Are Directors Entitled to Indemnification?
In Alberta, a director is only entitled to indemnification by the corporation for all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment in a civil context if they (i) were substantially successful in defending the claim; (ii) acted honestly and in good faith with a view to the best interest of the corporation; and (iii) is fairly and reasonably entitled to indemnity[3].

A corporation that does not contain indemnity provisions in its by-laws will still be liable for any loss incurred so long as these criteria are met. If indemnification provisions found in either the corporation’s by-laws, or in an agreement between the corporation and a director impose mandatory indemnification, it will of course be liable to do so.
 
How to Indemnify Directors
Indemnification provisions can be found within a corporation’s by-laws.  If a corporation seeks to provide its directors with a wide range of protection, these provisions do not need to be particularly robust.  Any attempt to predict the types of conduct or liabilities that the corporation anticipates indemnifying its directors against may simply limit its ability to protect its directors.
 
If the company’s bylaws do not provide indemnification provisions that are acceptable to a potential director, indemnification provisions may be included within a written agreement between the corporation and the director.  This method provides the greatest flexibility as each agreement can be tailored to suit the needs of both the corporation and the individual director.
 
Some things that indemnification provisions should contemplate include whether the corporation is required, or simply permitted to indemnify its directors (and in which circumstances), the timing of indemnity payments, and out of court settlement.  Indemnification provisions that do not require the corporation to indemnify its directors should also consider a mechanism to oblige the corporation to do so such as arbitration.
 
Corporations that provide the widest range of indemnity to their directors often simply state in its indemnification provisions that the corporation must indemnify the director to the greatest extent authorized under the relevant law.  Where it is desirable to minimize the short-term financial impact of litigation on directors, indemnity provisions may require the corporation to advance defence costs as they are incurred.  Such provisions should also contemplate whether the corporation is required to indemnify the director for out of court settlements, as opposed to simply court judgments.

What Indemnification Provisions Do Not Cover
Indemnification provisions do not cover directors’ actions when they are not made in good faith with a view to the best interests of the corporation. 

In cases where a director is being sued by the corporation or its shareholders, including in derivative actions, a corporation may only indemnify a director for their legal expenses.  This leaves directors exposed to liability for corporate or shareholder damages arising from their action (or inaction as the case may be).  Why is this? Most derivative actions against directors include a claim for breach of fiduciary duty.  If this claim is successful, and a breach has been found, a director will have been found not to have acted in good faith with a view to the best interests of the corporation, and indemnity would not be available in any event.
 
Hamish Gray is a member of the BLG Business Venture Clinic and is a third-year law student at the Faculty of Law, University of Calgary. 

REFERENCES:
[1] Black’s Law Journal; 2nd ed; online, <a href="https://thelawdictionary.org/indemnify/" title="INDEMNIFY">INDEMNIFY</a>
[2] Business Corporations Act, RSA 2000 cB-9 s124 [the Act]
[3] Act supra note 2 s124(3)
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Calgary Start-up Community

4/22/2019

3 Comments

 
CALGARY's START-UP COMMUNITY: AN OUTLINE OF SERVICES AND SUPPORT
INTRODUCTION
Calgary has many resources and opportunities to support entrepreneurs at all stages in their ventures’ development. Community supports exists for all the hurdles that growing ventures must overcome, whether your business is at the conceptual stage and you need help getting it off the ground, or your venture is growing fast and you need advice or support with bringing employees onboard, marketing your product or service, or finding the right investors. This blog post provides a non-exhaustive rundown of places and services in Calgary that can support entrepreneurs on their journey..
 
RESOURCES FOR STUDENTS
School provides a unique opportunity to learn theory and develop skills across a variety of disciplines, and to network and collaborate with like-minded people, in and out of the classroom.  While these opportunities can help students come up with novel and creative business ideas, often a little more help is needed to take an idea from concept to reality. Many post secondary institutions in Calgary provide resources to help students get their ideas off the ground.
  • Hunter Hub
The Hunter Hub for Entrepreneurial Thinking at the University of Calgary has many regularly scheduled and special events for budding entrepreneurs. The Hub offers Touch Down Tuesdays, where students can get drop-in support from experts in business and innovation. Hunter Hub also offers a Summer Incubator program that runs from May to September each year and provides selected graduate students with the resources and training needed to grow their start-up. In November, Hunter Hub celebrates Global Entrepreneurship Week, bringing together aspiring entrepreneurs and innovators to celebrate and share ideas. And of course, the weekly drop-in legal clinic hosted by the BLG Business Venture Clinic on Friday mornings is a great place to get information on issues like intellectual property, business incorporation, employment agreements and much more. Click here to learn more about Hunter Hub.
  • WannaB Wednesdays
Bow Valley College hosts bi-monthly ‘Lunch and Learns’ that teach attendees how to tackle many of the problems facing entrepreneurs. Over a free lunch, participants learn about how to generate revenue, choose the right business name, set themselves apart from their competitors and most effectively reach their target market.  Although spaces are reserved for Bow Valley students until three days before each session, any remaining spots are open to the public at no cost. Two weeks after the event, participants apply the tools they have learned by helping a social start-up or struggling social entrepreneur solve a problem they are facing. Find out more here.
  • 150 Startups
150 Startups is a province-wide entrepreneurship development program for post-secondary students. Over the course of the program, students have the opportunity to develop, validate, and launch their ventures, as well as collaborate with each other, and compete for cash and prizes in a series of challenges. Lean more here.
 
COWORKING SPACES
In addition to providing a means to keep overhead costs down and maintain flexibility in the early stages of a company’s growth, coworking spaces allow entrepreneurs to connect with one another, sharing skills, costs, connections and ideas. There are many coworking spaces across the city, forming a diverse range of entrepreneurial communities.
  • Infusion Coworking
Infusion Coworking is conveniently located downtown. Infusion integrates its members and itself into the broader start-up community by establishing networks with key partners in the city, and with university, private, and venture capital organizations. Infusion offers several different levels of membership, which offer technological amenities like conferencing and AV services, and facility perks such as bike storage, 24-hour access and security, and free coffee and tea. Also available are business consulting services, weekly development programs, and community building events with strategic contacts such as investors and tech specialists. Just need a place to work for a day? They’ve got that too.
  • ​Work Nicer
With three locations in inner-city Calgary and one in downtown Edmonton, Work Nicer is Alberta’s largest coworking community. In addition to the basics like mail handling, meeting rooms and printing services, Work Nicer also has perks like pet-friendly areas, beer on tap, and fitness facilities. Work Nicer’s credo is that no one succeeds alone. To that end, the organization carefully curates its membership to bring together people with complementary strengths and a desire to help each other, fostering innovation, and keep costs down, and letting each entrepreneur spend more time focusing on the work that really matters.
  • Fuse 33 Makerspace
Fuse 33 Makerspace in southeast Calgary caters to the hands-on creative crowd, providing access to hand and power tools, welding equipment, sewing and electronics labs, embroidery machines and 3D printing. Weekly workshops and certification classes ensure users can operate equipment safely and effectively. Fuse 33 is open seven days per week, so work can be done whenever it’s convenient, and some membership plans even offer temporary storage, guaranteeing projects that can’t be finished all at once remain safe between sessions.
  • Trico Changemakers
The Trico Changemakers Studio at Mount Royal University is a coworking and learning space for social entrepreneurs, innovators, activists and artists. Members of the co-working space include entrepreneurs within the for-profit and non-profit sectors who are driving change through innovative products, services and business models. Entrepreneurs can engage with the Studio community to broaden their networks and learn more about applying their skills and passions toward positive, sustainable change across multiple sectors. The space also regularly hosts events for the social entrepreneurship communities of Calgary and beyond. The Trico Changemakers Studio is the combined effort of the Institute for Community Prosperity, the Institute for Innovation and Entrepreneurship and the Bissett School of Business at MRU. Click here to learn more, and join their newsletter for regular event updates.
 
FOR THE LADIES
  • Chic Geek
Chic Geek is a non-profit organization with a mission to create a welcoming environment for women at the intersection of technology and entrepreneurship. This is done in several ways. Chic Geek facilitates a mentorship program, and hosts events and workshops that allow participants to connect with experts and the community at large, learning about topics like coding and robotic process automation. There is also an annual ‘Geeky Summit’, featuring speakers with expertise in engineering, blockchain, media, finance and more. Learn how you can get involved here.
  • YYC Girl Gang
Girl Gang connects female small business owners, providing an avenue to network and share skills, stories and support. Girl Gang hosts 6 events and 6 workshops per year, alternating each month. Previous themes include how to collaborate with influencers to use social media as a business tool, bookkeeping, and how to price your products. There’s just enough time to sign up for the  Tax Tips for Sole Proprietors workshop on April 16th.
 
MORE RESOURCES
  • Platform Calgary
Platform Calgary, formerly known as Calgary Technologies Inc., aims to put a focus on innovation in downtown Calgary. Along with the new name comes a new location at the Hillier Block in East Village. Platform Calgary is working to make innovation more accessible, by providing access to space, programs, mentorship and capital. It welcomes first-time entrepreneurs and established companies alike, ensuring innovators have access to the coaching and resources needed at all stages of their business. Platform Calgary works with the University of Calgary, the Calgary Chamber of Commerce and the City of Calgary, building strategic partnerships and leveraging the city’s entrepreneurial drive.
 
Nothing in this post quite right for you? Don’t worry, there’s more. Click here and here for more extensive lists of resources, events, spaces, meetup groups, and accelerator programs  Getting to know the community is the best way to identify which spaces and programs can provide the advice, support, people or partnerships to elevate your business.

Lastly, please remember that the BLG Business Venture Clinic is always happy to help. Fill out a request form here and we will get in touch to find out how we can help.

Melanie Bowman is a member of the BLG Business Venture Clinic, and is a 2rd year student at the Faculty of Law, University of Calgary.
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How to Incorporate

4/14/2019

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So, You’re Ready to Incorporate You’re Business: Where to Start.
You’ve had a great idea for some time. You’ve considered it deeply. You’ve made a business plan, and now it’s time to turn your dream into a reality. But where to start?
There are a variety of forms a business can take, but the corporate structure has tended to predominate for start-ups in Canada. [1] There is a good chance therefor you might settle on the corporate form for your new business. This post will not consider the pros and cons of different business structures. If you would like information that could help you choose a business structure, please contact the BLG Business Venture Clinic (the “Clinic”). [2] Incorporation, particularly in Alberta, is the subject of this writing. The purpose of this post is to shine light on resources that can help get you started and raise important considerations.
Free Resources
There are many free resources available online. It is important to ensure the information you find is trustworthy before relying on it to make business or legal decisions. The BLG Business Venture Clinic does not certify the correctness of the information in the resources that follow.
The Government of Canada provides a “Business Start-up Checklist” which offers a wide variety of information, including direction to provincial and territorial business registration resources. [3] The business registration information is separated by province and territory. [4] This is important because a business can be incorporated in a province, a territory, or at the federal level. The Government of Alberta offers information on registry costs and categorizes registries by services offered. [5] To find a business registry that offers incorporation services in your area, registry locations can be searched by city or town. [6]
Before you head to your local registry, there are a number of steps and information to gather. The Government of Alberta provides a list of steps to incorporate a business in the province. [7] They are as follows:
  1. Choose a business name,
  2. Get a NUANS Report,
  3. Complete the forms or otherwise collect the information you will need for incorporation, and
  4. Take your incorporation information, NUANS report, and fee to an authorized service provider. [8]
Information explaining each step is provided on the webpage. [9] Incorporation forms are also provided by the Government of Alberta. [10]
Considerations
An entrepreneur could use the resources above, pay the NUANS report and incorporation fees and successfully incorporate a business in Alberta. The incorporation documents discussed are the legal foundation of a business and considerable thought should go into drafting their substance. For example, in the articles of incorporation or an appendix thereto, the drafter can add desired provisions. A provision in the articles can allow the board of directors to increase the number of directors by up to one third (1/3) of those elected at the last annual general meeting. [11] This increase can remain in effect until the following annual general meeting. [12]
Another consideration is, “[t]he securities law regime in Canada requires that certain restrictions on the transfer of shares be included in the articles of a company if certain exemptions from prospectus and registration rules are to be available.” [13] One of these exemptions is the “private issuer” exemption which “is one of the easiest and least complicated to use in the very early stages of a growth company’s financing.” [14]
Aside from the documents discussed above, a corporation should consider having by-laws ready to sign upon incorporation. The by-laws of a corporation deal with a variety of internal elements including processes, powers, and roles. Ensuring a corporation has by-laws in place from the start can avoid uncertainty and potential issues. There are boiler-plate by-laws available online, but they often are ill suited to a particular corporation. Certain boiler-plate provisions “will be removed as a condition of any future financing.” [15] They should be avoided at the outset instead of requiring amendment later. Aside from issues to avoid, the by-laws should be drafted to appropriately reflect the needs of the corporation. This means including the right provisions and the correct balance of powers.
Conclusion  
Resources are available to incorporate a business on ones own. There are however considerations and drafting of language that may warrant the services of a lawyer. Finances are often tight during the start-up phase and it may be tempting to avoid the cost of legal fees. However, there are options that may help control costs. The BLG Business Venture Clinic is one resource that can help do just that. The Clinic offers free legal assistance, provided by law students. The assistance offered includes drafting of documents discussed in this post and the writing of memos on specific issues or questions a business might have. It is recommended that clients of the Clinic have the work reviewed by a lawyer. A review of prepared documents should however cost less than having a lawyer draft the documents themselves.
 
Neil Thomas is a member of the BLG Business Venture Clinic, and is a 2rd year student at the Faculty of Law, University of Calgary.

References
[1] Bryce C. Tingle, Start-up and Growth Companies in Canada: A Guide to Legal and Business Practices, 3rd ed (Canada: LexisNexis Canada Inc, 2018) p 58 [Tingle].
[2] University of Calgary, “We’re here to help – Contact us!” (2017), online: BLG Business Venture Clinic <thttp://www.businessventureclinic.ca/contact.html >.
[3] Government of Canada, “Business Start-up Checklist” (September 28, 2018), online: Government of Canada <https://canadabusiness.ca/starting/checklists-and-guides-for-starting-a-business/business-start-up-checklist/>.
[4] Ibid.
[5] Government of Alberta, “Find a business registry” (2019), online: Alberta <https://www.alberta.ca/find-business-registry.aspx>.
[6] Government of Alberta, “Level 2: advanced registrations” (2018), online: Alberta <http://servicealberta.ca/Find-a-business-advanced-registrations.cfm>.
[7] Government of Alberta, “Alberta Corporations” (2018), online: Alberta <https://www.servicealberta.ca/712.cfm>.
[8] Ibid.
[9] Ibid.
[10] Government of Alberta, “Incorporation forms” (2019), online: Alberta <https://www.alberta.ca/incorporation-forms.aspx>.
[11] Business Corporations Act (Alberta), RSA 2000, c B-9, s 106(4).
[12] Ibid.
[13] Tingle Supra note 1 at p 63.
[14] Tingle Ibid; Prospectus and Registration Exemptions – Consolidated Version for Periods Relating to Financial Years Beginning Before January 1, 2011, NI 45-106, s 2.4.
[15] Tingle Ibid.

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