You’ve Created a Corporation… Now What?

You’ve Created a Corporation… Now What?

You’ve just finished filing your forms and articles of incorporation, you’ve received your certificate of incorporation; congrats! You created a corporation. You are well on your way to a (hopefully) successful business venture. However, before you are in the clear, there are formal requirements that must be met early in the life of the corporation. The first of these steps is the organization meeting, which as it indicates, is designed to internally structure the corporation. The second is the first annual shareholders meeting.
 
The Organization Meeting
Corporations incorporated in Alberta are governed by the Business Corporations Act RSA 2000 c B-9 (the “Act”). The Act requires that the board of directors meet after the certificate of incorporation is issued. At this first meeting, the directors institute certain foundational elements of the corporation. At the organization meeting the directors may:

1. Make by-laws. By-laws are the rules that govern the internal operation of a corporation. you may set out rules that are not deal with by the Act, or if permitted by law, you may modify the rules of the Act. The directors may make, repeal and amend the bylaw. Every new by law requires shareholder approval at the next regular shareholders meeting.
2. Adopt forms of security certificates and corporate records.
3. Authorize the issue of securities.  Directors may issue shares by majority vote; this resolution must be recorded in the minute books. A share cannot be issued until the corporation receives full consideration for the share. This consideration may be money, property, or services given to the corporation.
4. Appoint officers. Officers typically include a CEO or president, a CFO or treasurer, and a secretary. The officers and directors form the management of the corporation. The Officers are responsible for the daily operation of the corporation.
5. Appoint an auditor. This auditor will hold the office of the auditor until the first annual meeting of the shareholders. At which time the shareholders may choose to elect the same or a different auditor.
6. Make banking arrangements. The corporation will need a bank account to transact business, and may have short term borrowing requirements.

 
The Annual Shareholder Meeting
The next milestone for the corporation will be the first annual shareholders meeting. The Act requires that this meeting be called by the directors within 18 months of the date of incorporation. At this meeting the shareholders will:

1. Elect the directors: the first directors were indicated on the forms required for incorporation. The shareholders may elect these first directors, or other individuals nominated.  
2. Confirm, modify or reject the by-laws: by-laws are first approved by the directors. If the by-laws are approved by the shareholders they are retroactively effective as of the date they received directors’ approval.
3. Appoint an auditor: this may be the same auditor as appointed by the directors.

 
Shareholders meeting are required to be held annually. Each meeting must take place within 15 months of the last shareholders meeting.
 
Following the Act and properly documenting the directors’ and shareholders’ meetings will go a long way to ensuring that your corporation stays onside the law. A few simple steps early in the corporation’s life will allow you to focus on the business and keep the lawyers’ fees to a minimum.

Kevin Major-Hansford is a 2018 JD/MBA Candidate at the University of Calgary and a caseworker at the BLG Business Venture Clinic.