Alberta to remove directors residency requirements

A new omnibus Bill in Alberta (Bill 22) provides for changes to the Business Corporations Act (Alberta) (the ABCA) and the Companies Act (Alberta) to remove Canadian residency requirements for directors of corporations governed under those statutes. Bill 22 received Royal Assent on July 23, 2020, however will only come into effect upon Proclamation at a later date to be announced.

Currently under the ABCA, which governs Alberta incorporated “for profit” corporations including unlimited liability corporations, at least 25% of the directors of a corporation must be resident Canadians and business may not be transacted at meetings of the board unless 25% of the directors present are resident Canadians. The Companies Act, which applies to Alberta formed “non-profit” companies, is even more restrictive and requires at least 50% of the directors of a company to be resident Albertans and business may not be transacted at meetings of the board unless 50% of the directors present are resident Albertans. The proposed amendments set out in Bill 22 remove all such residency requirements, making it easier for foreign controlled entities to create Alberta subsidiaries and thereby promoting economic growth in Alberta. 

The removal of the Canadian residency requirements provides more flexibility to foreign clients who often chose to incorporate Canadian subsidiaries in other provinces that do not have Canadian residency requirements, such as British Columbia, Quebec, New Brunswick, Nova Scotia and Prince Edward Island. Bill 22, which amends 14 pieces of legislation and also provides for changes that are intended to reduce the time to obtain oil sands project approvals, has been characterized by the Government of Alberta as clearing the way for businesses to operate more freely and efficiently in Alberta as the province reopens the economy in the wake of the COVID-19 pandemic. 

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