Written By Bryan Haynes and Adrienne Roy

Removal of Residency Requirements for Directors

On March 29, 2021, Alberta removed the Canadian residency requirements of directors for Alberta corporations governed by the Alberta Business Corporations Act (ABCA). Previously, the ABCA required at least 25 percent of an Alberta corporation's directors to be resident Canadians. The ABCA also imposed a residency requirement for quorum: in order to transact business at a meeting of directors, 25 percent of the directors present had to be resident Canadian (subject to limited exceptions). In addition, if the corporation wished to appoint a committee of directors or a managing director, 25 percent of the members of the committee or the managing director had to be resident Canadian. The Canadian residency requirements of directors for companies governed by the Alberta Companies Act have similarly been removed. The end of the residency requirement is made pursuant to Bill 22, Red Tape Reduction Implementation Act, 2020 (RTRI Act). The RTRI Act is an omnibus bill that amends 12 pieces of legislation and repeals 2 others across 6 government departments. The Government of Alberta has categorized the objectives of the amendments into four categories: speeding up government approvals; easing administrative burdens on municipalities; improving government transparency and removing outdated requirements; and promoting economic growth and job creation by eliminating unnecessary burdens. The recent changes to the ABCA fall into the last category and are expected to be a welcome change for foreign investors.

New Agent for Service Requirement

Another change introduced by the RTRI Act is that ABCA corporations are now required to appoint an agent for service who must be an individual resident Albertan and have an office that is accessible to the public during normal business hours. Existing ABCA corporations will have until March 29, 2022, to appoint an agent for service by sending a notice of appointment to the Registrar of Corporations. If an ABCA corporation does not make the requisite appointment within the one-year time frame, the Registrar of Corporations can dissolve the corporation.  

Next Steps

If an ABCA corporation no longer wishes to have resident Canadians on its board, a review of the corporation's by-laws is necessary to determine whether any by-law amendments are required to reflect the removal of the residency requirements from the ABCA before making any changes to board composition. Bennett Jones can advise and assist corporations with the above changes, including reviewing and amending by-laws, if an ABCA corporation wishes to take advantage of the removal of the director residency requirements. For further information, please reach out to one of the authors, your contact at Bennett Jones or a member of the Bennett Jones Commercial Transactions team.

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