In this article, we discuss the Annual Report and other routine annual paperwork that would apply to a typical, privately held BC company.
Obligation to File. Every BC company must file an Annual Report each and every year. This requirement is set out in s. 51 of the BC Business Corporations Act (the “BCA”). The Annual Report is due within two months after each anniversary of the company’s incorporation date. For example, if a BC company was incorporated on June 30, 2020, then its Annual Report is due by August 30 of every subsequent year, starting in 2021.
The Annual Report must be in a specific form. The current form is Form 6, which can be found online at the BC government website. At the time of writing Form 6 can be found here.
Failure to File. If a company fails to file its Annual Report within the two-month period noted above, that company will no longer be in good standing with the Registrar of Companies.
When a company is not in good standing, a prominent notation stating this appears on the corporate registry, which can be viewed by anyone who searches the company. Among other things, the Registrar may refuse to accept any further filings until the company is in good standing (for example: Notice of Change of Address, Notice of Change of Directors, Notice of Alteration, or other filing).
Fortunately, a company can return itself to good standing by filing the required Annual Report(s). Late Annual Reports can be filed after the company has already fallen out of good standing (but before it is dissolved – see below).
Dissolution for Failure to File. Eventually, failure to file Annual Reports can result in the company being dissolved by the Registrar under s. 422 of the BCA. This can happen when a company fails to file an Annual Report for two consecutive years. In such cases, the Registrar posts a notice on the corporate registry that the company is in the process of being dissolved, and may eventually exercise its discretion to dissolve the company if no steps are taken to address the deficiency.
If a company is dissolved by the Registrar for failure to file Annual Reports, the company ceases to exist (although its liabilities continue). In addition, if the company had any assets at the time of dissolution, those assets vest in the government in accordance with s. 344 of the BCA. Assets vested in the government are not recoverable unless the company is restored.
Other Routine Annual Paperwork
In addition to Annual Reports, the three most common documents completed by BC companies on an annual basis are:
- Annual Shareholders’ Resolutions;
- Annual Directors’ Resolutions; and
- Dividend Resolutions.
Annual Shareholders’ Resolutions. Every BC company is required to hold annual general meetings (also called an “AGM”). Specifically, each company must hold its first AGM within 18 months of its incorporation date (or its recognition date, if not incorporated in BC) and thereafter, once every calendar year and within 15 months of its previous AGM.
In practice, most privately held companies in BC complete written consent resolutions in lieu of holding formal AGMs. The BCA allows this when all shareholders entitled to vote at an AGM consent in writing to the business required to be transacted at the AGM (for example, the election of the board of directors, the approval of financial statements, etc.).
Sometimes, separate consent resolutions of the non-voting shareholders are desired, for example where the shareholders wish to waive the requirement to appoint an auditor (mandatory unless waived by all voting and non-voting shareholders), or where the shareholders wish to relieve the directors of their obligation to produce and publish annual financial statements at the AGM (also mandatory unless waived by all voting and non-voting shareholders).
Annual Directors’ Resolutions. As above, the directors usually transact routine annual business through consent resolutions in writing in lieu of holding a formal directors’ meeting for this purpose. The routine annual business of the board of directors includes items such as the approval of financial statements (unless this obligation is waived – see above) and the appointment of the company’s senior officers.
Dividend Resolutions. The directors may wish to declare dividends from time to time to its shareholders. For most companies, this involves passing a director’s resolution that sets out the particulars of the dividend (for example: the dividend type, amount of the dividend, affected class or classes of shares, record date, how and when the dividend will be paid, etc.). Commonly, the directors instruct the company’s accountant to forward dividend instructions directly to the company’s corporate lawyer, who will then prepare the resolutions and file them in the corporate records binder.
Most law firms (including ours) will prepare the Annual Report together with the Annual Shareholders’ Resolutions and the Annual Directors’ Resolutions described as part of their registered & records office services above. Note: dividend resolutions are usually charged separately.
Our experienced lawyers at Taylor & Taylor Law Corporation regularly work with BC companies and their owners. If you have any questions about your company, we would be pleased to work with you.