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>.
​

Written by Abdul Abbas
JD Candidate 2025 | UCalgary Law

This blog outlines the legal effect of incorporating indemnification rights in a contract, as opposed to relying on a common law claim for breach of contract or tort, including:

1. available remedies flowing from an act or omission subject to an indemnity; and
2. the enforceability of an indemnity clause as opposed to a common law claim.

This post summarizes (i) the remedies available through contract/tort and indemnity claims, and the steps required to enforce them, (ii) the effect of including indemnification rights in a contract, and (iii) the limitations of indemnity rights.

1. Brief Summary
Indemnity remedies are enforceable when the event stipulated in the indemnity clause occurs, regardless of the circumstances that led to the event. While remedies commonly take the form of monetary relief, an indemnity remedy can take whatever form the parties agree upon. When indemnity clauses are disputed, a court’s discretion is used to decide whether the terms of the indemnity clause have been fulfilled, rather than what the appropriate remedy is. In contrast, common law claims and remedies are typically determined at the court's discretion, through the application of established legal tests.
Therefore, indemnity clauses streamline the remedial process by providing indemnified parties the right to obtain monetary reimbursement for demonstrated losses sustained. Indemnity clauses allow contracting parties to better manage what remedy each party will and will not be entitled to, so as to mitigate and allocate risk.

2. Analysis
A. Available Remedies and Enforcement Without an Indemnity Clause
Remedies
Remedies available for breach of contract and tort claims at common law are generally limited to damages,[1] injunctions,[2] and, in rare circumstances, declarations.[3] The court may decide at its discretion what remedies it awards, in accordance with the common law.

Enforcement
Tort Claims
A simplified version of the test for tort claim damages (the “Tort Remedies Test”) is:

1. the plaintiff must prove that the defendant breached the standard of care expected of a reasonable person in similar circumstances;[4]
2. the plaintiff must prove that the defendant had a proximate enough relationship to the plaintiff to be owed a duty of care;
3. the plaintiff must prove that the defendant breached that duty of care;
4. the plaintiff must establish that it sustained loss resulting from said breach; and
5. the plaintiff must establish that the loss sustained by the breach was reasonably foreseeable to the defendant.[6]

If a loss suffered by a party is not contemplated by an indemnity clause or due to a breach of a contract, the Tort Remedies Test will apply. For example, if Party A is contracted by Party B to conduct services at Party B’s premises, and the agreement between these parties does not contemplate liability for damage caused to Party B’s property in connection with the services, then if Party A causes damage to Party B’s premises, Party B must seek damages through the Tort Remedies Test, since there is no contractual breach (or contractual indemnity clause covering a loss of such nature).

Breach of Contract
To receive damages for a claim in respect of a breach of contract, the plaintiff is required to prove the non-performance of a contractual provision by the defendant. Unlike tort claims, neither foreseeability nor proximity are considered when determining breach of contract claims.[7] Rather, “any award for contract damages is based on the undertakings or promises made by the defendant”.[8] The damages awarded are intended to represent “the losses that the promisee has already incurred and the court’s estimate of any future losses for which the promisee might be entitled to compensation”. [9]
Enforcement of breach of contract remedies also involve the duty to mitigate, which requires plaintiffs to take all reasonable efforts to reduce their losses after a breach of contract.[10] An injured party that fails to mitigate may be awarded reduced damages by a court.

Drawbacks of Not Including Indemnity Clauses
Indemnity clauses allow contracting parties to mitigate the risk of extensive legal procedure. Plaintiffs must establish substantial deprivation of benefit[11] and reasonable mitigation efforts in order to be awarded damages for breach of contract claims, and must satisfy the Tort Remedies Test to be awarded tort claim damages. Both types of claims require extensive legal analysis and are ultimately decided at the discretion of the court, which leaves the parties in a state of uncertainty regarding the court’s final decision.

A. Available Remedies and Enforcement With an Indemnity Clause
Overview
Indemnity clauses allow contracting parties to avoid having to satisfy common law requirements to claim contract/tort damages. Instead, indemnity clauses allow parties to agree in advance that one contracting party will owe another contracting party a specified amount of money (or be liable for a specified category of damages, which may be broadly defined) if a certain event takes place.

Remedies
The application of an indemnity remedy is more flexible than breach of contract or tort claim remedies since the parties have control over drafting the indemnity clause. Therefore, indemnity remedies can take any form, but commonly take the form of monetary relief. As long as the event stipulated in the indemnity clause takes place, the indemnified party is owed the agreed upon remedy, without having to satisfy common law tests for damages.

Enforcement
An indemnified party only needs to prove the loss specified in the indemnity clause occurred to receive the indemnity. Essentially, if a contracting party forgoes the inclusion of an indemnity clause, they also forego their ability to pursue remedies without having to prove fault or mitigation efforts (subject to the terms that the parties agree must be satisfied for such indemnity to be applicable in the first instance).
The event that triggers an indemnity can be any event the parties agree upon and does not need to be a breach-of-contract-like event (e.g. non-performance of contract provision). Also, similar to common law claims, the extent to which indemnity-based damages are enforced is subject to the indemnified party’s duty to mitigate against losses.[12]

Benefits of Indemnity Clauses
Indemnity clauses provide contracting parties with greater control over undesired scenarios that often result from the common law awards process, such as:

1. the award amount not representing the true damage suffered;
2. litigation costs;
3. delay in the damages being awarded; and
4. receiving no damages if the court does not believe the required legal tests or analyses are satisfied.

Another benefit of an indemnity clause is that the indemnity can be owed in any scenario, irrespective of whether the indemnifying party triggered the indemnifying event.[13] Further, there is no requirement for a person/party to cause the loss, as the loss can result from natural or uncontrollable causes.[14] An example of this would be weather insurance. In this case, a party is indemnified for damages it sustained from intense weather conditions like tornados or floods, and not due to the actions of the other contracting parties.
Indemnity remedies are also not limited to the losses recognized at common law, as is the case with claims for breach of contract or in tort. For instance, legal costs on a solicitor-and-client basis do not generally fall within the scope of damages recognized by courts.[15] However, an indemnity clause can account for that type of loss, since it allows contracting parties to control not only the events that trigger the indemnity, but also the extent indemnified parties are compensated. A practical example of this is an indemnity clause that states compensation shall include all loss resulting from an event, rather than only reasonably foreseeable losses, as is the case for common law remedies.

B. Limitations
Limitations of Indemnity Clauses in Jurisprudence
There are limitations to what can be included in indemnity clauses, as courts generally tend to read down “sweeping” [16] or overly broad contractual provisions. The interpretation of indemnity clauses is essentially consistent in this respect with general contractual interpretation considerations, with courts attempting to balance parties’ freedom of contract with overly broad or onerous provisions. A couple general rules to keep in mind in this respect are that courts (i) will interpret contractual provisions on a contextual basis,[17] and will read down a provision to give it a more context appropriate effect, and (ii) tend to read down contract provisions less frequently between parties it believes to be of “equal bargaining power”.[18] An example of a sweeping contractual provision that would be more likely to be read down absent express evidence of the parties’ intentions to the contrary is an indemnity clause that protects a party against its own negligence or deliberate wrongdoing.[19]
As a general rule, when drafting indemnity clauses, a drafter should therefore consider the scope of the indemnity clause (how broad or narrow the language used is) and the perceived bargaining power between the contracting parties. [20]

Exclusive Remedy Clauses
It is not uncommon for "exclusive remedy" clauses to accompany indemnity clauses, so as to limit indemnified parties from pursuing any remedies other than those prescribed (whether in the contract as a whole, or in a particular provision, as applicable).[21] Exclusive remedy clauses act as a risk mitigation tool for the indemnifying party and eliminate the possibility of "incurring liability beyond the remedy specified in the agreement".[22]
In such case, the drafter should pay particular attention to the scope of the indemnity – if the scope of the indemnity is broad (in terms of both the types of loss or damage it covers, as well as the extent of available damages), such indemnity being an “exclusive remedy” may be acceptable. However, drafters should not assume that having an indemnity within an agreement, as an exclusive remedy, is necessarily preferable to having access to other common law remedies, particularly if the indemnity applies narrowly.


[1] Canadian Encyclopedic Digest [CED], Contracts at s 260.

[2] Ibid.

[3] CED, Torts at s 57.

[4] Vaughan v Menlove (1837), 132 ER 490.

[5] Cooper v Hobart, 2001 SCC 79.

[6] Mustapha v. Culligan of Canada Ltd, 2008 SCC 27.

[7] Canadian Contract Law, Angela Swan, Jakub Adamski, Annie Y. Na, LexisNexis, Fourth Edition [Canadian Contract Law] at 409.

[8] Ibid.

[9] Canadian Contract Law, supra note 7 at 407.

[10] Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51.

[11] Hong Kong Fir Shipping Co. Ltd. v Kawasaki Kisen Kaisha Ltd., [1962] 2 QB 29.

[12] Parc Downsview Park Inc v Penguin Properties Inc, 2018 ONCA 666 at para 89.

[13] CED, Guarantee, Indemnity and Standby Letters of Credit [“CED on Indemnities”], at s 116.

[14] Ibid.

[15] CED on Indemnities, supra note 13 at s 122.

[16] The Law of Guarantee, Kevin McGuinness, 3rd ed, LexisNexis [“The Law of Guarantee”] at 8.12.

[17] Rizzo & Rizzo Shoes Ltd, [1998] 1 SCR 27.

[18] Globex Foreign Exchange Corp v Kelcher, 2005 ABCA 419 at para 28 [“Globex”].

[19] The Law of Guarantee, supra note 16.

[20] Globex, supra note 18.

[21] Risk Allocation in Commercial Contracts, Practical Law Canada, at Practice Note 3-617-7736.

[22] Ibid.
​

Written by Brayden Mills
JD Candidate 2026 | UCalgary Law
 
Diversity and inclusion have evolved from mere buzzwords into essential components of effective corporate governance. In Canada, the increasing emphasis on diverse leadership is reshaping boardrooms, redefining regulatory practices, and driving sustainable business performance. This post explores how Canadian companies are integrating diversity into their governance frameworks, examines the forces behind these changes, and discusses practical strategies and future implications.
​
The Changing Landscape of Corporate Governance in Canada
Over the past decade, corporate governance in Canada has experienced significant transformation. Factors such as globalization, evolving societal expectations, and heightened investor scrutiny have contributed to a paradigm shift. Traditionally homogeneous boardrooms are now giving way to more inclusive environments, where diverse perspectives enhance decision-making and strategic planning.
In this context, diversity isn’t limited to gender representation; it also encompasses ethnicity, age, disability, and varied professional backgrounds. The rationale is clear: diverse boards can better understand and navigate the complexities of modern markets, leading to improved corporate performance and risk management.

Regulatory Developments Promoting Board Diversity
Recent initiatives signal a major shift toward improved transparency and inclusiveness in board composition. For example, new guidelines proposed in February 2025 would require Canadian banks and federally regulated financial institutions to disclose the diversity composition of their boards and senior management. These regulations, if put into force, would mandate detailed reporting on the representation of women, Indigenous peoples, persons with disabilities, and visible minorities.[1]
This regulatory push reflects a broader governmental agenda to modernize corporate governance. The Government of Canada has been actively engaged in consultations aimed at improving diversity disclosure practices among federally regulated institutions, thereby reinforcing the message that inclusive governance is not only a social responsibility but also a driver of sustainable economic performance.[2]

Insights from the Osler Report
A strong resource in understanding current diversity trends is the 2024 report by Osler titled Diversity Disclosure Practices & Diversity and Leadership at Canadian Public Companies. [3] This comprehensive study reveals that investor and regulatory pressures are leading companies to adopt more rigorous diversity disclosure practices. Key insights include:

• Enhanced Transparency: Canadian public companies are increasingly committed to disclosing not only gender diversity but also broader metrics that include racial, ethnic, and disability-related diversity.
• Best Practices for Reporting: The report outlines best practices in setting diversity targets, measuring progress, and incorporating these metrics into broader corporate strategies.
• Leadership Trends: It also highlights that companies with diverse boards tend to have better governance practices, improved risk management, and stronger overall performance.

By establishing clear guidelines and benchmarks for diversity reporting, the Osler report provides a roadmap for companies aiming to enhance their governance structures. This emphasis on accountability ensures that diversity initiatives are not just superficial but are embedded into the core operational strategies of the organization.
Likewise, recent insights from The Corporate Governance Institute emphasize how increased diversity at the board level is linked to improved corporate performance and profits.[4]

The Role of Advocacy Organizations
Advocacy groups are also key players in advancing diversity within corporate governance. The Canadian Centre for Diversity and Inclusion (CCDI) is one such organization that offers invaluable resources, training, and strategic support to companies committed to creating inclusive work environments. The CCDI emphasizes:

• Training and Awareness: Providing tailored programs that educate corporate leaders about the benefits of diversity and the best practices for implementing inclusive policies.
• Resource Sharing: Disseminating research, case studies, and strategic frameworks that help organizations measure and improve their diversity performance.
• Collaborative Initiatives: Encouraging partnerships among businesses, government bodies, and advocacy groups to foster an ecosystem that supports diverse leadership.

Such efforts not only drive progress within individual companies but also contribute to a broader cultural shift within the Canadian corporate landscape.[5] Their work underscores the importance of measurable diversity targets and continuous improvement in corporate practices.

Challenges and Considerations
Despite significant progress, challenges remain. Some critics argue that mandatory disclosure requirements could lead to a "tick-box" approach rather than fostering genuine cultural change. Furthermore, political developments could impact the enforcement of these diversity regulations.[6] Continuous dialogue among regulators, companies, and advocacy groups will be essential to address these concerns and ensure that diversity initiatives lead to substantive, long-lasting improvements.

Future Outlook: The Road Ahead for Canadian Corporations
Looking forward, the integration of diversity into corporate governance is expected to deepen further. Future trends may include:

• Increased Regulatory Oversight: As stakeholders demand higher accountability, regulatory bodies are likely to introduce more rigorous standards for diversity reporting.
• Technological Integration: The use of advanced analytics and AI-driven insights could transform how companies measure and manage diversity, providing real-time data to inform board decisions.
• Broader Stakeholder Engagement: Investors, employees, and consumers are becoming more vocal about the need for inclusive practices. Companies that proactively engage these stakeholders are likely to build stronger, more resilient organizations.
• Global Alignment: As Canadian companies increasingly operate in a global market, aligning diversity practices with international standards will become crucial. This will not only enhance competitiveness but also contribute to a more equitable global business environment.

These emerging trends underscore the strategic importance of diversity as a long-term driver of innovation and performance.

Conclusion
The drive toward greater diversity in corporate governance is reshaping the Canadian business landscape. With regulators tightening oversight, industry leaders championing inclusive practices, and advocacy organizations offering robust support, the journey toward equitable boardrooms is well underway. Companies that embrace this change not only align with societal values but also position themselves for enhanced innovation and resilience in an increasingly complex global market.



[1] Lampert, Allison. “Canadian banks must reveal diversity of board, top managers under proposed rules | Reuters”, (17 February 2025), online: Reuters <https://www.reuters.com/business/canadian-banks-must-reveal-diversity-board-top-managers-under-new-rules-2025-02-15/>.
[2] Department of Finance. “Corporate Governance Consultation: Improving Diversity and Facilitating Electronic Communications in Federally Regulated Financial Institutions”, (14 January 2025), online: Government of Canada <https://www.canada.ca/en/department-finance/programs/consultations/2022/modernizing-corporate-governance-federally-regulated-financial-institutions/improving-diversity-facilitating-electronic-communications-federally-rgulated-financial-institutions.html? >. 
[3] MacDougall, Andrew et al. “2024 diversity disclosure practices: Diversity and leadership at Canadian Public Companies”, (4 November 2024), online: Osler, Hoskin & Harcourt LLP<https://www.osler.com/en/insights/reports/report-2024-diversity-disclosure-practices-diversity-and-leadership-at-canadian-public-companies/>. 
 
[4] Conmy, Stephen. “Board diversity leads to better profits”, (22 March 2024), online: The Corporate Governance Institute <https://www.thecorporategovernanceinstitute.com/insights/news-analysis/board-diversity-leads-to-better-profits/>. 
[5] Canadian Centre for Diversity and Inclusion <https://ccdi.ca/>. 
 
[6] Supra note 1.

Written by Jordan Smith
JD Candidate 2026 | UCalgary Law

 
Venture Capital (VC) Overview
 
Definition of VC
Venture Capital is a form of private equity (for more information on the differences between various types of equity and debt financing, see the BVC blog) and a type of financing for start-up companies and small businesses with long-term growth potential.[1] Venture capitalists provide value through financing, as well as technological, managerial, or strategic support.
 
Often, venture capitalists provide business expertise and experience to founders who may possess more technical expertise and require guidance to scale their company. VC represents a crucial source of financing for start-up companies, especially those who may not be able to access traditional bank loans, capital markets, or other debt instruments.[2]
 
Today, a large proportion of VC investments are focused on companies developing artificial intelligence (AI) for various applications such as healthcare, autonomous vehicles, and clean technology.
 
History of Venture Capital
The true origin of VC is contested and may trace all the way back to when Christopher Columbus was sponsored by Queen Isabella of Spain for his voyage to the Americas. Since this was a high-risk venture, in return for her funding, the Queen received 90% of the eventual profits from his discovery of the West Indies.[3]
 
Flash forward approximately 450 years, and we find the more agreed upon inception of modern VC. In 1946, Harvard Business School professor General Georges F. Doriot, colloquially the “Father of Venture Capital”, and his co-founders created the American Research and Development Corporation (ARDC).[4], [5] The ARDC sourced funds from various institutions and directed these investments into private companies focused on technologies developed during World War II.
 
In the years that followed, interest in VC grew, and was catalyzed by the work of Arthur Rock, a student of General Doriot’s, and the industry took off in the 1960’s and 70’s.[6] In 2024, global venture capital investments totaled approximately $368 billion USD.[7]
Benefits and Potential Drawbacks of VC
 
Benefits of VC
In addition to financing, VC investment brings additional benefits, including:

• Growth acceleration – VC firms are able to bring companies to the public markets sooner than non-venture backed companies, and when they do, valuations are proportionately higher. [8]
  • VC funding helps to accelerate research and development, manufacturing, hiring, and other capital-intensive business initiatives.
• Long-term financial benefits – VC backed firms that go on to become public tend to have higher cash flows and sales growth than their peers in the public market who did not.
  • Other studies have found that venture-backed companies also have significantly higher employment and sales growth.[9]
• Reputational reinforcement – VC investment, especially from reputable VC firms, helps to bolster a company’s reputation as it grows, which is beneficial as a company introduces new technologies or products and expands to new markets.
  • Additionally, VCs are able to tap into their strong network of contacts and connections to help provide additional exposure to their investee companies.[10]

 
Potential Drawbacks of VC
Although VC investment brings immense benefits, there are things to watch out for, specifically related to contractual terms and control:

• Investment terms – venture capitalists require more complex and potentially more onerous contractual terms for their investment because of the benefits they provide and their need to manage risks such as agency costs. It is important to note that VC contracts tend to be balanced, but individual provisions, such as retraction rights, anti-dilution rights, and liquidation rights, require additional negotiation and discernment.[11]
  • As companies mature and go through financing rounds, subsequent investors will use prior terms as a negotiating base, so it is important to be prudent at the outset of outside investment.
• Undue influence – VC firms may end up with more influence than a founder or founding team desires, based on the size of their investment and contractual terms, such as those above or covenants on the company. VC investment contracts are difficult for entrepreneurs to get out of.[12]
  • It is important for founders to vet VC firms just as VC firms vet founders and companies, to find the right relationship for the health and success of the company and the entrepreneur(s) themselves.[13]

 
VC Landscape in Canada and Alberta
 
Growth in Alberta
Venture Capital has historically experienced the most prevalence in Silicon Valley (SV) due to SV’s high concentration of technology companies that attract VC funding. In fact, by 1992, 48% of all investment dollars went into West Coast companies.[14] However, in the last number of years, beginning in the early 2010s, VC funding has grown in Canada, and Alberta has experienced significant growth within this advancement.[15] Overall, since 2013, 300 companies have received $3.9 billion CAD in venture capital investments in Alberta, and there are 50 VC firms headquartered in the province.[16]
 
According to the Canadian Venture Capital Association (CVCA), there was $7.9 billion CAD invested in Canada across 592 deals in 2024, with $698 million CAD invested across 84 deals in Alberta.[17] Although total investment was down compared to 2021 and 2022 due to macro-economic changes, total investment grew 11% compared to 2023. In 2024, VC investment concentrated on later-stage funding, as many companies that had originally been backed in 2021 and 2022 sought larger funding rounds.[18]
 
Calgary Strength in VC
In 2024, Calgary ranked fourth in Canada in VC investment (and second behind only Toronto in the first half of the year), behind Toronto, Montreal, and Vancouver.[19], [20] 63 deals were made totaling $630 million CAD in investment. This represented growth of over $100 million CAD in VC investment year over year, despite a nationwide decrease, which demonstrates additional promise for the local ecosystem.[21]
 
In Calgary, specific sectors that have shown and continue to show strong growth are financial technology or fintech (highlighted by Neo Financial’s success), agriculture technology, and life sciences.[22] Additionally, Calgary’s high concentration of head offices represents an additional catalyst for venture capital investment; one study of nearly 14,000 Canadian venture capital investments found that over 84% of the investments involved an investor and entrepreneur in the same province.[23]
 
Main Takeaways

• As an investment vehicle, VC has grown substantially since its formal inception in the mid 1940’s focused on technologies developed during World War II, to a financing source that generated nearly $2 trillion USD in global investment from 2021-2024[24], [25], [26], into a wide variety of sectors.
• VC investment provides both financial and intangible benefits, including expertise, guidance for management, reputational benefits, and long-term profitability boosts.
• VC investment also has potential drawbacks, such as more onerous investment terms in financing agreements and the potential for venture capitalists to have greater influence than desired within companies they invest in.
• Within Canada, Alberta and specifically Calgary are strong markets and are poised for continued growth in venture capital investment in the coming years, as the provincial and local economies continue to diversify and focus on emerging sectors such as financial technology, agriculture technology, and life sciences.

 
Resources
 
For companies that are pre-VC, there are a number of resources (both funding and programming) within the Alberta and Calgary ecosystems. Some starting points for additional information include Calgary Economic Development, the Opportunity Calgary Investment Fund, Alberta Innovates, and Invest Alberta.
 
For questions, please feel free to reach out to us at the Business Venture Clinic!

DISCLAIMER: Venture Capital will not be applicable to or available for every company. This post presents a high-level overview of VC financing and its potential benefits and drawbacks but is not comprehensive or exhaustive. If you have questions about VC or other financing sources, or have other questions, please refer to other Business Venture Clinic blog posts or contact us directly.


[1] Adam Hayes, What is Venture Capital? Definition, Pros, Cons, and How It Works, (18 Oct 2024), online: https://www.investopedia.com/terms/v/venturecapital.asp

[2] Ibid.

[3] Ivelina Niftyhontas, Journey Through Time: A Comprehensive History of Venture Capital, (7 Dec 2023), online: https://www.goingvc.com/post/journey-through-time-a-comprehensive-history-of-venture-capital

[4] Ibid.

[5] Supra note 1.

[6] Supra note 3.

[7] KPMG, 2024 global VC investment rises to $368 billion as investor interest in AI soars, while IPO optimism grows for 2025 according to KPMG Private Enterprise’s Venture Pulse, (January 2025), online: https://kpmg.com/xx/en/media/press-releases/2025/01/2024-global-vc-investment-rises-to-368-billion-dollars.html

[8] Bryce Cyril Tingle, Start-up and Growth Companies in Canada: A Guide to Legal and Business Practice, (Canada: LexisNexis, 2018) at p 314 [Tingle]

[9] Tingle at p 314.

[10] Ibid at p 313.

[11] Ibid at pp 326-327.

[12] Ibid at p 331.

[13] Ibid.

[14] Supra note 1.

[15] Tingle at p 315.

[16] CVCA, Home, online: https://www.cvca.ca/?gclid=CjwKCAiAt4C-BhBcEiwA8Kp0CbovHXz343y3DEnyLLaH5JnbQ3Fsy61HPkRsF1eqWVl-E7I_sMFsdBoC8hEQAvD_BwE

[17] CVCA, Canadian Venture Capital Market Overview 2024, at p 6, online: https://reports.cvca.ca/books/myfw/#p=6

[18] Ibid at p 12.

[19] Knowlton Thomas, Calgary Snags Second Spot in National Ranking of Venture Capital Flow, (22 July 2024), online: https://calgary.tech/2024/07/22/calgary-second-spot-national-ranking-venture-capital-flow-canada/

[20] Aryn Toombs, Calgary saw major growth in venture capital deals in 2024, (20 February 2025), online: https://livewirecalgary.com/2025/02/20/calgary-saw-major-growth-in-venture-capital-deals-in-2024/

[21] Ibid.

[22] Supra note 20.

[23] Tingle at p 317.

[24] Supra note 7.

[25] KPMG, Q4’23 global VC deals volume drops to level not seen since Q3’16, (January 2024), online: https://kpmg.com/xx/en/media/press-releases/2024/01/q4-2023-global-vc-deals-volume-drops-to-level-not-seen-since-q3-2016.html

[26] KPMG, Global venture capital annual investment shatters records following another healthy quarter, (January 2022), online: https://kpmg.com/xx/en/media/press-releases/2022/01/global-venture-capital-annual-investment-shatters-records-following-another-healthy-quarter.html
​

Written by Sean Kimak
JD Candidate 2025 | UCalgary Law
 
Traditionally, a minority shareholder (“MSH”) held minimal power to influence the decisions of directors, and therefore the overall direction of a corporation they owned a stake in.[1] In the absence of MSH rights provided by a shareholders agreement (such as a unanimous shareholders agreement), or by the articles or bylaws of the company, the majority shareholders of a corporation retain the right to appoint directors of the corporation and, therefore, to affect key decisions of the organization.[2] Where a MSH disagrees with these decisions, often their only recourse is to sell their shares in the company. However, even this option can be “somewhat illusory”, particularly in cases where there is a limited market for the shares or where resale restrictions exist.[3]
 
Consider the following scenarios:

• The majority shareholder (or shareholders) uses their power to give preferential or non-market-rate contracts to parties not at arm’s length (“NAL”) with the corporation.
• The majority shareholder borrows money from or lends money to themselves, or other NAL parties.
• The majority shareholder owns competing companies, and uses their control power to divert business opportunities to those companies, instead of the one you own a stake in.
• The majority shareholders are holders of a different class of shares than you, with preferential rights to dividends and/or priority in bankruptcy. This impacts their decision to issue dividends, or to file for bankruptcy.

 
Despite each share having an equal per-share equity stake by default, the above scenarios are examples of how majority shareholders may make decisions contrary to the interest of a MSH, for their own benefit. Luckily, there are various protections afforded to MSHs by both statute and common law.
 
This blog post provides a brief overview of the main protections afforded to MSHs of companies incorporated under the Alberta Business Corporations Act (“ABCA”)[4].  
 
Primary Rights & Remedies Enshrined by the ABCA
 
I. Fiduciary Duty & Duty of Care
The most basic protections afforded to a MSH are provided by the fiduciary duty and duty of care owed by director and officer of a corporation, towards the corporation.[5] These duties are statutorily enshrined in section 122(1)(a) and 122(1)(b) of the ABCA, respectively:
 
122(1)  Every director and officer of a corporation in exercising the director’s or officer’s powers and discharging the director’s or officer’s duties to the corporation shall
(a) act honestly and in good faith with a view to the best interests of the corporation, and
(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
 
In Peoples Department Stores Inc (Trustee of) v Wise,[6] the Supreme Court of Canada held that the statutory fiduciary duty enshrined in section 122(1)(a) of directors is owed exclusively to the corporation, and not directly to shareholders or other stakeholders such as creditors.[7] In exercising this duty of loyalty, directors and officers may consider the long-term interests of the corporation, the environment, and the interests of shareholders, employees, retirees, pensioners, creditors, consumers, and governments.[8] As a result of Peoples and the subsequent Supreme Court decision in BCE Inc. v. 1976 Debentureholders[9], directors and officers do not owe their fiduciary duty solely to shareholders.[10] Still, a duty to shareholders (including MSHs) may arise on the facts, such as in the case of a sale of shares. Unfortunately for shareholders, these decisions permitted directors to consider a multitude of factors outside of shareholder value maximization, when making decisions. This may limit the ability of a MSH to enforce the fiduciary duty required by ABCA section 122(1)(a) through a legal action.
 
Similarly, the duty of care owed by directors and officers per section 122(1)(b) does not refer to any specific party: it is an open-ended duty, and is owed to more than just the corporations shareholders to include parties such as creditors.[11] Furthermore, the Supreme Court determined that section 122(1)(b) of the CBCA does not provide an independent foundation for claims against directors or officers.[12] Thus, while actions may be brought against directors or officers who breach this duty in tort, or pursuant to other provisions of the ABCA, these actions are potentially difficult to enforce due to the multitude of parties to whom the duty is owed.[13]
 
Thus, while these duties are not owed solely to shareholders, they arguably still provide safeguards to ensure that directors act in the interest of the corporation. In most (but not all) cases, this provides a degree of protection for MSH interests. In cases where directors act against the best interest of the corporation (as opposed to a MSH), a derivative action may be brought.
 
II. Derivative Actions
Derivative actions, codified by Section 239 of the ABCA, originate from the fact that corporations have their own legal status. Bringing a derivative action is akin to assuming the position of the corporation to bring an action against a director or officer for harm that was suffered as a result of their conduct.[14]
 
To commence a derivative action, applicants require permission (known as “leave”) from the applicable court.[15] This is to prevent frivolous or vexatious actions, largely because the corporation must pay the legal fees for the action and because any decision will necessarily bind all shareholders of the company.[16] In considering whether to grant leave, the presiding court will ask whether the action is in the best interests of the company. Derivative actions can in theory be brought if a director breaches their fiduciary duty or duty of care towards the company as a whole; however if a MSH feels they are personally being treated unfairly and not the corporation as whole, a derivative action is of little use to them. Furthermore, derivative actions are difficult to litigate, so only a handful of derivative action cases have been brought in Canada against directors for breach of their duty of care.[17]
 
III. Oppression Remedy
By contrast, the oppression remedy, codified by section 242 of the ABCA,  allows complainants such as MSH to bring personal actions against the corporation. Per the Supreme Court of Canada in BCE:[18]
 
“[t]he oppression remedy focuses on harm to the legal and equitable interests of stakeholders affected by oppressive acts of a corporation or its directors. This remedy is available to a wide range of stakeholders — security holders, creditors, directors and officers.”
 
To succeed in their claim, a complainant must establish (1) that they held a “reasonable expectation”, and (2) that the “reasonable expectation was violated by conduct falling within the terms ‘oppression’, ‘unfair prejudice’ or ‘unfair disregard’ of a relevant interest”.[19] If the court finds that a director’s conduct falls under any of these definitions, the court may “make any interim or final order it thinks fit”.[20] While there is some ambiguity regarding “reasonable” expectations and debate over what conduct meets the threshold of oppression, unfair prejudice, or unfair disregard, the oppression remedy may still be best way for a MSH to enforce their right to be treated fairly.
 
IV. Right to Dissent & Right to Appraisal
There are further remedial protections under ABCA section 191 and CBCA section 190 to allow individual shareholders to dissent in cases where they disagree with fundamental changes to the company, including cases where a corporation resolves to amend its articles, to change or remove provisions relating to the issue, transfer, or rights of a class or series of shares, to change the type of business that the corporation may carry on, to amalgamate with another corporation, or to sell, lease or exchange all or substantially all its property.[21] In these cases, a dissenting shareholder has the right to be paid out at fair value of their shares. If the corporation and dissenting shareholder cannot agree on this value, a court may step in to determine the share price, and to make related orders.
 
The court also holds power under ABCA section 193 (Court Approved Arrangements), to approve or deny any proposed plan of arrangement[22]. Courts review proposed arrangements to determine if
 
V. Various Additional Rights Provided by the ABCA
All shareholders are entitled to access corporate records under section 23 of the ABCA. This includes articles, bylaws, unanimous shareholders agreements, meeting minutes, shareholder resolutions, notices of the appointment or election of directors, securities registers, copies of financial statements, and any corporate disclosures made relating to contracts under ABCA section 120.[25]
 
Furthermore, the registered holders or beneficial owners of not less than 5% of the issued shares may force management to call a shareholders meeting pursuant to ABCA section 142.
 
VI. Minority Protections under MI 61-101
In select circumstances, additional MSH protections are provided by Multilateral Instrument 61-101 (“MI 61-101”) as adopted by the Alberta Securities Commission, the provincial securities regulator.[26] The intent of MI 61-101 is to ensure that security holders are treated fairly in transactions where there is a potential material conflict between the interests of related parties and those of minority security holders”.[27]
 
MI 61-101 protects minority shareholders in certain types of transactions, including:

• Insider Bids: Offers by insiders to acquire additional voting or equity securities.
• Issuer Bids: Repurchases of securities by the corporation itself.
• Business Combinations: Reorganizations that alter or terminate shareholders’ interests without their consent.
• Related Party Transactions: Deals between the corporation and related parties.

 
The key protections that MI 61-101 provides include:

• Minority Approval: Transactions must be approved by a majority of MSH. i.e. the minority cannot be overruled by the majority shareholder in this vote.
• Independent Valuation: Independent experts must assess valuations relied upon in the transaction.
• Enhanced Disclosure: Comprehensive information must be disclosed to shareholders.
• Fairness Opinions: commonly obtained to demonstrate financial fairness.

 
Importantly, MI 61-101 only applies to “reporting issuers”.[28] There are also various technical exceptions to the requirements of the instrument. Still any company listed on the TSX, TSX Venture Exchange, Cboe Canada, or the Canadian Securities Exchange are subject to its requirements, giving some additional certainty to MSHs where a company is publicly listed.[29]
 
Conclusion
This blog post outlines the main remedies that may be available to MSHs when their interests are being materially impacted by actions outside of their control, in a unfair manner. It is not an exhaustive list and other remedies may exist in common law, statute, or contract.
 
Before becoming a MSH, it is important to consider the rights available to you and the potential costs to enforcing those rights. Since some of the above-mentioned rights and remedies are difficult to enforce, MSHs should look to further protect specific rights through well-defined shareholders’ agreements, or other agreements, where possible.
 
Disclaimer: This post is intended for informational purposes only and does not constitute legal advice. For legal advice, consult a qualified lawyer.


[1] L.M. Schaef, “The Oppression Remedy for Minority Shareholders” (1985) 23:3 Alta L Rev 511 [Schaef] at 512.

[2] Business Corporations Act (Alberta), RSA 2000, c B-9 [ABCA]at s. 106;

[3] Schaef, supra note 1, at 512.

[4] This blog post refers to relevant sections of the ABCA, however, all provinces except PEI, Nova Scotia and Quebec have adopted a business corporation act substantially similar to the Canada Business Corporations Act, RSC 1985, c C-44 [CBCA]. Therefore equivalent sections likely exist those other jurisdictions, with only very minor differences, if any. This blog post applies only to corporations. It is a broad overview of statutory protections and does not discuss the interpretation of these protections by the courts.

[5]BCE Inc. v. 1976 Debentureholders 2008 SCC 69 [BCE]: (“The directors are responsible for the governance of the corporation. In the performance of this role, the directors are subject to two duties: a fiduciary duty to the corporation under s. 122(1)(a) (the fiduciary duty); and a duty to exercise the care, diligence and skill of a reasonably prudent person in comparable circumstances under s. 122(1)(b) (the duty of care)” at para 36.)

[6] Peoples Department Stores Inc (Trustee of) v Wise, 2004 SCC 68 [Peoples].

[7] Ibid, at para 42; This was reaffirmed in BCE, supra note 5, at paras 40-41; Both Peoples and BCE refer to the CBCA, but the same provisions exist in the ABCA.

[8] F Stewart, “A History of Canadian Corporate Law: A Divergent Path from The American Model?” in Harwell Wells, ed, The Research Handbook on the History of Corporate and Company Law (2018) 451 [Stewart]: (“In 2004, when the Supreme Court ruled on the Peoples case, it interpreted this provision as follows: [I]n determining whether [directors] are acting with a view to the best interests of the corporation it may be legitimate, given all the circumstances of a given case, for the board of directors to consider, inter alia, the interests of shareholders, employees, suppliers, creditors, consumers, governments and the environment. This decision shocked Canadian corporate law observers…” at 20-21).

[9] BCE, supra note 5.

[10] Practical Law Canada Corporate and Securities “Duties of Directors: Fiduciary Duties - Practice Note 7-567-9614” (Accessed 23 Feb 2025) online: Thomson Reuters Canada [PL – Fiduciary Duties].

[11] Practical Law Canada Corporate and Securities “Duties of Directors: Duty of Care - Practice Note 7-586-6493” (Accessed 23 Feb 2025) online: Thomson Reuters Canada [Practical Law – Duty of Care].

[12] Ibid; BCE, supra note 5 at para 44: (“Section 122(1)(b) does not provide an independent foundation for claims. However, applying the principles of The Queen in right of Canada v. Saskatchewan Wheat Pool, 1983 CanLII 21 (SCC), [1983] 1 S.C.R. 205, courts may take this statutory provision into account as to the standard of behaviour that should reasonably be expected.”).

[13] Practical Law - Duty of Care, supra note 11; Stewart, supra note 8: (“Iacobucci was critical, arguing that BCE ‘fails to articulate a determinate fiduciary duty’….He added that whether one believes… ….that such fiduciary duties ought to be owed to shareholders or stakeholders, ‘it is difficult to defend a fiduciary duty that fails to guide either directors or courts’… …VanDuzer worried about the wider discretion granted to directors, arguing they will ‘take comfort from the Court’s strong endorsement of the business judgement rule,’ foreseeing: ‘self-serving behaviors... dressed up as protecting the best interests of the corporation by reference to the interests of one stakeholder or another’”).

[14] BCE, supra note 5 at para 43; Natalie Leclerc & Nicholas Ramessar, “Options for Minority Shareholders Oppression and Derivative Relief” (30 November 2022), online: Carscallen LLP https://carscallen.com/commercial-litigation/options-for-minority-shareholders-oppression-and-derivative-relief/ [Leclerc & Ramessar].

[15] BCE, supra note 5at para 43.

[16] Ibid.

[17] Stewart, supra note 8 at 24.

[18] BCE, supra note 5 at para 45.

[19] Ibid at para 68; BCE notes these terms are poorly defined, at para 54.

[20] ABCA, supra note 2 at s 241.

[21] Refer to ABCA, supra note 2, at s. 191 for scope of application and exceptions.

[22] Defined by ABCA, supra note 2, at s 193(1).

[23] BCE, supra note 5, at para 46.

[24] Ibid.

[25] Types of records listed at ABCA, supra note 2, at s 21(1).

[26] Canadian Securities Administrators, “Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions”, (31 July 2017).

[27] Goodmans LLP ,“Conflict of Interest Transactions in Canada and Recent Regulatory Guidance.” Goodmans LLP, online: https://www.goodmans.ca/docs/default-source/default-document-library/conflict-of-interest-transactions-in-canada-and-recent-regulatory-guidance.pdf?sfvrsn=5e33b2b6_2&t at 2.

[28] “Reporting Issuer” is defined in the Securities Act RSA 2000, c S-4, at s 1(ccc).

[29] Practical Law Canada Corporate and Securities “Roadmap to Multilateral Instrument 61-101” (Accessed 23 Feb 2025) online: Thomson Reuters Canada.