Posting about legal issues affecting British Columbians.
If you are incorporating a company in British Columbia, one of the first considerations you will make is what to name your company. Choosing a specific company name is not mandatory. In fact, many companies incorporate as a “numbered company”, meaning they use the number assigned to them by the British Columbia Corporate Registrar of Companies. A typical numbered company’s name would look like “1234567 B.C. Ltd.” That said, most new companies want to choose a corporate name to personalize the new venture, and to establish a name under which marketing can commence. Company names vary widely. Often the incorporator will choose a name that is meaningful to them (typical for closely-held family companies), or a name that describes the type of business the company will be doing.
How do you obtain a name for your company?
Naming of companies in British Columbia is handled by the British Columbia Registrar of Companies (the “Registrar”). Among other things, the Registrar has the authority to reserve names for new companies and register changes to the names of active British Columbia companies. Before you can incorporate a named company, you must submit a Name Approval Request Form to the Registrar and wait for their approval. On approval they will provide a reservation number that will be input as part of the application for incorporation.
When requesting a corporate name, you can submit up to three names in order of preference. The Registrar will need to check the corporate names against their database, as well as make other considerations, to determine if there is a similar or identical name already in existence in British Columbia. If there is an issue with your choices, your name request could be denied. In this case you will be asked to resubmit a new request.
In some cases, the Registrar may also consider whether there is a similar or identical name in another province or jurisdiction. If there is a business operating in another province with a name too similar to yours, you may be required to obtain consent from that party before the Registrar will grant your name request. If you are having trouble getting name approval for a name that has important significance to you or your business, it may be helpful to speak with an Incorporation Lawyer, who can advise on the proper procedure to obtain the use of the name for your business.
When should you submit a name approval request to the Registrar?
If you are hoping to incorporate in the near future, it is often a good idea to submit a Name Approval Request in advance. As it can take up to several weeks to obtain approval of your name request from the Registrar (note: the wait time varies depending on volume of submissions), submitting the request in advance can expedite the incorporation process when you are ready to incorporate your new company. It is also possible to expedite a name request for an additional fee of $100. This can reduce your waiting time to days rather than weeks.
Keep in mind that name reservations expire after 56 days – so you or your lawyer may need to request an extension from the Registrar if you are not ready to incorporate when your name reservation comes up for renewal.
If you are planning to do business in another province, a different type of name search, called a Nuans report, may be required. A Nuans report lists similar corporate names and trademarks across Canada other than names in Quebec. It does not guarantee that your proposed name is approved, however, a Nuans report is required in advance of obtaining name approval in many provinces outside British Columbia. A lawyer can help you determine if this search is required for your business.
What goes in a name?
A corporate name for a British Columbia company must have three parts: (i) a distinctive element (i.e. something that enables the public to distinguish your company from another company operating in British Columbia, such as your name or initials); (ii) a descriptive element (i.e. something that describes the business activities that will take place in your company); and (iii) a corporate designation (e.g. Limited, Ltd., Inc. Corporation etc.). For example, “XYZ Investments Corporation”, or “123ABC Holdings Ltd.”, would be names that meet the Registrar’s naming requirements (however, they would only be approved if they were not similar or identical to an existing company name).
I have my corporate name reserved, now what?
Once you have obtained name approval from the Registrar, you will be ready to begin preparing the incorporation paperwork that will be required to incorporate your company in British Columbia. These documents can include an incorporation application, incorporation agreement, articles for the company, shareholders’ and directors’ resolutions, securities and directors registers, share subscriptions and setting up varying share classes for the company, to name a few. If you have questions about the name reservation process or the incorporation process, you may wish to speak with an Incorporation Lawyer, who, working with your financial/tax advisors, can help you create a company that works for you and your business over the lifetime of the corporation.
Schedule a consultation with an Incorporation lawyer at Taylor & Taylor Law.
There are many considerations to make when purchasing commercial real estate, whether the intended use is for development or simply to keep using the property as-is. While price and location often dominate the conversation, numerous legal issues can affect the viability of a commercial real estate deal in BC.
In this article, we explore some of the early-stage aspects of legal due diligence in a commercial real estate deal in BC, and a basic idea of what it means when a lawyer mentions “due diligence” in context of purchasing commercial real estate in BC.
Land Title Searches
A land title office search can identify essential information such as who the registered owners are, what encumbrances are registered against title, and the legal description of the lands. It is essential for a prospective buyer of commercial real estate to know who the vendor is to ensure they are dealing with the correct party.
Encumbrances on title can vary widely. Some common non-financial encumbrances that can affect property use are easements, statutory rights of way, building schemes, phased development agreements and restrictive covenants. Notably, a title search only shows the existence of the encumbrance and who registered it, not the details of the encumbrance itself. Details about the encumbrance can only be found by separately searching for and obtaining the encumbrance. Fortunately, many non-financial encumbrances are filed with land titles and can usually be obtained quickly and for nominal cost.
It is common for expired encumbrances to remain on title. Often the only way to determine if an encumbrance has expired is by obtaining the underlying document from land titles and reviewing it.
Sometimes it may be desirable to search neighboring properties, as restrictions on adjacent properties may impede future expansion, if that is contemplated. In other cases, purchasers of commercial real estate may require encroachment agreements with neighboring owners, for example, for underpinning or other encroachments.
Zoning and/or ability to rezone a prospective property can make or break a commercial real estate deal and should be identified as early as possible. It is common for the purchaser to make these investigations themselves, or hire a consultant to do so. A lawyer may be required if issues are encountered during investigations. As well, municipal bylaws may impact development and future use or proposed use of a target property, and should be reviewed early on in the process.
Provincial and Federal Searches and Environmental Searches
There are a wide variety of provincial and federal searches that can be relevant to a commercial real estate deal. Some of the most common searches are those related to the environment, including environmental searches through the Ministry of Environment (provincially in BC) and Environment Canada (federally). Depending on the results of an initial environmental search, it may be prudent to hire an environmental consultant to determine whether further environmental investigations are necessary.
Other searches include those to determine whether lands are in the agricultural land reserve, or whether the target lands have historical or archeological significance.
Since commercial property is usually leased, a purchaser should have full knowledge of the status of any leases of the property. Copies of all leases should be reviewed, giving particular attention to clauses like lease term, renewal terms, termination clauses, landlord covenants, rent, and restrictions on assignment and/or subletting.
It will usually be prudent for a purchaser to obtain estoppel certificates from some or all of the tenants in a commercial building as a condition of completing the sale. An estoppel certificate can confirm things from the tenant like: the current rent, the lease term, that all rent has been paid, and that there are no disputes under the lease.
Plans and Surveys
It is important to review a copy of the plan of the property, which can be obtained from the land title office. The plan shows the location and approximate dimensions of the property, and should be reviewed early on. Since plans filed at the land title office are not guaranteed to be accurate, a prudent purchaser will consider ordering a survey of the property to verify the location of things like improvements, easements and rights of way on the property.
The scope of legal due diligence relevant to a commercial real estate deal is much broader than the basic steps discussed in this article. However, this article should provide a basic understanding of some of the early stage due diligence steps a prudent purchaser may take. As always, it is advisable to speak with a professional before entering into a contract to purchase or sell commercial real estate. A legal professional can help you determine a due diligence plan that works for you.
Schedule a consultation with a lawyer at Taylor & Taylor Law.
As most societies are now aware, every pre-existing society in British Columbia must file a transition application under the Societies Act by November 28, 2018. In other words, societies have until November 28, 2018 to file an electronic transition application by using the Government of British Columbia’s Societies Online web service.
Which societies must file a transition application?
Every society that was incorporated, amalgamated, continued or converted under B.C.’s old Society Act or any of its predecessor acts.
When must the transition application be filed?
A transition application must be filed electronically using the Societies Online system by November 28, 2018.
What if a society misses the deadline?
A society does not file a transition application by November 28, 2018 could be dissolved by the Registrar.
What can/cannot be changed during transition?
It is helpful to set out a few ground rules for the transition process:
- A society may not change its purposes or any unalterable provisions during the transition process. The purposes and unalterable provisions must remain “word-for-word” throughout the transition.
- A society may change its bylaws (other than unalterable provisions) during the transition process, but only after obtaining the approval of its members by special resolution.
- A society is free to change its bylaws and constitution, including its purposes or its previously unalterable provisions any time after transitioning. Changes to a society’s bylaws or constitution require prior member approval by special resolution.
What are a society’s options?
Many societies are now taking the opportunity to review their bylaws and constitution as they go through the transition process. This is a good thing, as clauses in the old bylaws that conflict with the new act are invalid to the extent of the conflict. After reviewing their constitution and bylaws (in some cases after no review in years or decades) many societies are choosing to make changes to these important documents.
A society is permitted to change its bylaws on transition, so long as previously unalterable provisions are left unchanged. In practice, it may be difficult or impracticable to obtain member approval to change the bylaws before filing a transition application.
In this circumstance, a society may choose to file its transition application using its existing bylaws (note, the existing bylaws and all changes to them must be consolidated into a single, integrated electronic document for filing with the transition application). The society may then make changes to the bylaws after the transition process is complete, for example by seeking member approval for changes at the society’s next general meeting.
Importantly, any change to a society’s bylaws or constitution requires approval by special resolution of the society’s members. Under the new Societies Act, unless a society’s existing bylaws mandate a higher threshold, the society must have support of at least 2/3 of its members at a general meeting to make changes to its bylaws or constitution.
Will transitioning affect a society’s charitable status?
The transition process will not normally affect a society’s charitable status, because changes to the society’s purposes are not possible during transition.
However, societies that are registered charities must file certified copies of their post-transition constitution and bylaws with the Charities Directorate. For more information, see the Government of Canada’s publication on making the transition to the new Societies Act.
Notably, a society who does not file a transition application before the November 28, 2018 deadline could be dissolved. Once dissolved, the society would cease to have legal existence. As a result, the dissolved society could have its charitable status revoked.
For further information, there is a lot of helpful material on the Government of British Columbia’s website regarding the transition process. You may wish to speak with a lawyer about the transition options available to your society.
Schedule a consultation with a lawyer at Taylor & Taylor Law.
When a taxpayer dies in Canada, a number of tax obligations can arise, including preparing and filing personal tax returns for the deceased and estate tax returns for the deceased’s estate. These obligations often become the responsibility of the deceased’s legal representative, the executor or administrator of their estate. Taking care of the taxes is one of the most important roles of an executor or administrator, however it is often one of the most misunderstood obligations.
This blog identifies some of the main tax obligations that executors and administrators need to turn their mind to when they agree to take on their role. These obligations should be discussed with your estate lawyer at the start of the probate or administration process, and with a tax accountant, so that the tax filings are well underway and the risk of delaying any distribution of the estate is minimized.
While this blog contains a general overview of taxes upon death, this should not be relied upon as a complete analysis of tax issues. Instead, executors and administrators should seek the advice of a tax accountant, and refer to guidance from Canada Revenue Agency, and the Income Tax Act, 1985, c 1.
Executor and Administrator liability
When taking on the role of executor or administrator, this role comes with many important duties and obligations, one being ensuring the taxes of the deceased are appropriately filed and remitted to the CRA.
When income taxes are not filed, interest, penalties and fines may accrue, thus increasing the debts of the estate. The executor or administrator of a deceased’s estate have a legal duty to act in the best interest of the estate and its beneficiaries. One aspect of this duty is making sure that the estate’s debts are paid, including that taxes and all other debts are paid. Executors and administrators must also try to minimize unnecessary expenses to the estate (for example, interest, penalties and fines on late taxes). In many cases, a prudent executor or administrator can easily avoid unnecessary interest, penalties and fines on unpaid taxes.
General tax obligations for a deceased person
Typically, the first income tax return that will become due is the terminal T1 (General) income tax return for the deceased. This return generally must be filed by the later of six months from the date of death of the deceased, or April 30 (the personal tax filing deadline) of the following year. In some circumstances, where the deceased was behind on filing and paying their taxes in previous years, there may be several tax returns required to cover any missed previous years, in order to catch up on the deceased’s taxes owing.
If the deceased owned or was a director or officer of a company, you may also need to ensure that the corporation’s tax obligations are being addressed as well. These obligations could include corporate taxes owing, as well as other remittances which can include GST, PST and employee remittances such as EI and CPP. If you are uncertain as to whether or not the deceased had an ownership interest in, or was a director or officer of a company, you should contact a corporate lawyer as soon as possible.
General tax obligations for the deceased’s estate
As well, the executor or administrator is responsible for filing tax return(s) for the estate itself. A T3 (Trust) tax return must be filed within 90 days of each fiscal period of the estate (which begins on the date of death and must end no later than 365 after the date of death). Depending on how long it takes to wrap up the estate, the estate may have several income taxes to file. As this is a different type of tax return than a personal return, many executors find it beneficial to engage a tax accountant who can assist you in preparing and filing these tax returns properly, and within the appropriate time-frames.
Depending on the nature of the deceased’s income, the estate may be allowed to file other income tax returns, and it may be advantageous to do so. This is something to discuss with a tax accountant.
The executor or administrator should obtain a clearance certificate from the CRA before distributing any property to the beneficiaries or heirs. Generally speaking, a Clearance Certificate is available after the requisite returns have been filed and after amounts owing by the deceased to the CRA have been paid. If the executor or administrator distributes any part of the estate before obtaining a Clearance Certificate, they may be held personally liable for any taxes owing under section 159(2) and (3) of the Income Tax Act (Canada). It can take significant time to obtain a Clearance Certificate, therefore the process should be initiated as soon as possible with a tax accountant so that the distribution of the estate can occur in a timely fashion.
There are several exceptions to the filing deadlines mentioned above, as well as differing strategies with respect to filing these income tax returns to maximize tax credits and deductions. As such, it is important to speak to a tax accountant as soon as possible after the death of the deceased, so that the tax preparation can get underway, and various strategies can be discussed and employed to minimize the taxes payable to the estate.
If you are an executor or administrator of an estate and are uncertain about whether or not taxes are being addressed properly, you should immediately contact a tax lawyer.
Schedule a consultation with a lawyer at Taylor & Taylor Law.
Personal Representative vs. Executor
A “personal representative” is simply the legal term in BC for a person who has been appointed as executor and trustee in someone’s last will and testament. Historically, personal representatives were referred to as executors. The legal terminology formally changed to “personal representative” in 2014 when the Wills, Estates and Succession Act came into force. Since the historical term is still commonly used in BC, we will use the term “executor” to refer to personal representatives throughout the article.
Generally speaking, an executor manages the assets, debts and taxes of the deceased and their estate. They are also responsible for distributing the deceased’s assets in accordance with the deceased’s will. In many cases, the executor must also apply to the Supreme Court of British Columbia for probate of the deceased’s will.
Sometimes, a person’s last will appoints more than one executor. The co-executors are typically called on to carry out their duties as executors jointly. In most cases, the will-maker will also appoint one or more alternative executors, who are authorized to act when the will-maker’s first choice is unable or unwilling to act.
In some circumstances, the deceased may die without a will. This is called dying intestate. In these circumstances, the individual seeking to act as executor must apply to the court to be appointed to administer the estate. This is known as obtaining a grant of administration.
Duties of the Executor
The duties of an executor can be time consuming and burdensome. There are general duties imposed by law, and additional or modified duties may be expressed in the will. Thus an executor’s specific duties will vary from estate to estate. The general duties that apply to executors typically include: safeguarding the deceased’s assets, paying the deceased’s debts and making provisions for preparing tax returns for the deceased and the estate, searching for assets and creditors, notifying beneficiaries, managing the deceased’s investments and insurance, continuing or initiating legal actions on behalf of the estate, and keeping proper accounting of all of the money that comes in and out of the estate.
The executor may also be required to obtain probate for the estate. Essentially, a grant of probate validates the will and provides third parties (such as banks, insurance companies or land registries) evidence of the executor’s legal authority to deal with the deceased’s property. In practice, many third parties will refuse to deal with a executor until a grant of probate has been obtained.
If you are uncertain as to whether or not the estate you are administering requires probate, you may wish to speak with an Estates Lawyer.
Deciding to take on the Role of Executor
The fact that a person appointed you to be their executor does not legally require you to take on the role. An executor who does not wish to act, or is unable to do so, may be able to legally renounce the appointment, allowing a remaining co-executor(s) or alternate executor(s) the opportunity to take on the role. However, you can be deemed to have accepted the role of executor (and the corresponding personal liability) merely by acting in a manner that shows intention to assume that role. Conversely, if you are not appointed as an executor and you would like to take on this duty, you may be able to challenge the appointment of another person as executor.
If you have been appointed as executor in a deceased individual’s will, and are uncertain as to whether or not you wish to take on the role, you may wish to seek legal advice prior to commencing.
Executors take on personal liability, including liability for breach of trust in connection with administering the estate, and for errors or omissions in managing the assets and liabilities of the deceased. Complications in estate administration often arise if the will includes ongoing trusts which must be administered and in situations where the deceased has a complex investment or asset portfolio, where the executor is not familiar with the deceased’s financial affairs, or where there are disputes among estate beneficiaries or the executor.
Depending on the estate, there may also be estate variation and litigation considerations that arise as part of the estate administration. Very generally, the Wills, Estates and Succession Act permits spouses and children to make an application in court to vary a will that does not, in the court’s opinion, make adequate provision for their proper maintenance and support. The potential for wills variation claims often prompts executors to engage a lawyer to assist even at the earliest stages of the estate administration process. A lawyer will be able to discuss in greater detail the duties involved in acting as executor, and assist you in limiting your personal liability throughout the process.
Before taking on the role of executor, it is important to consider the duties, time, effort and potential for person liability involved in accepting the role, and to understand that in some cases, renouncing the role may be a preferable option.
Schedule a consultation with a lawyer at Taylor & Taylor Law.