Annual Maintenance for Companies

Having your own corporation will introduce you that species of government beast known as red tape. A BC company will face annual filing requirements under various statutes, provincial and federal. The main annual filings are:

• corporate income tax return;
• filing T4 income tax withholding report for your employees (including the owner);
• goods and services tax (GST);
• Workers' Compensation Board annual return;
• filing requirements imposed by applicable regulatory bodies (eg, motor carrier; real estate; medical doctors; dentists; accountants; lawyers; securities industry); and
• Corporate Registry (annual report) filing.

Today, I want to focus on this last requirement: filing the company's "annual report" in the Corporate Registry.

Some people confuse this filing with the requirement to file their corporate income tax return, probably because "annual report" sounds a lot like something they heard in relation to tax filings or possibly from public company documents. But they're not the same thing at all. The T2 corporate income tax return must be filed with Canada Revenue Agency under the Canadian Income Tax Act. Unlike individuals, a corporation must file its tax return each year, even if there is no activity. For corporations that qualify, a "T2 Short Return" can be filed, which reduces the paperwork needed. Either kind of return is due within six months after the corporation's taxation year-end.

The requirement to file the "annual report" with the Corporate Registry arises under the Business Corporations Act (BC). The document is a simple form that sets out the name of the company, the address of the registered office of the company, the original date of incorporation and the anniversary date for which the filing is being made, the incorporation number, and the full names and addresses for each officer (not director) of the company. The form must be filed online, within 60 days of the anniversary of the company's incorporation date. The current filing fee is $45. It is something you can do yourself, with a credit card, through Corporate Online. If you do file yourself, be sure to either print or save to your hard disk a copy of the filed annual report. Put the printed copy of the annual report under the "Documents Filed with Registrar" tab in your corporate records book.

Be aware that if you don't file the annual report for two years in a row, the BC Registrar of Companies will be able to strike your company, which means your company will die, with potentially unwanted consequences.

Filing the annual report is good, but that's not the end of the story. Just before you file the annual report, be sure to create and get signed the required "annual general meeting" shareholder and director resolutions for your company. These are resolutions allowed to be passed in writing instead of going to the trouble and expense of having a real shareholders' meeting, in the way that a public company, such as Telus or Intel, is required to do. Having a formal shareholder meeting involves writing up a formal notice of meeting, proxy, and management information circular, mailing those documents to the shareholders, and then having a physical meeting within the time limits required by applicable law.

A typical AGM consent shareholder resolution does four things:

1. elects or re-elects the directors for the upcoming year;
2. accepts the report of the directors;
3. accepts the financial statements for the company; and
4. waives the appointment of an auditor for the company for the next financial year.

The AGM consent director resolution is passed by the newly (re-)elected directors and appoints the officers of the company for the upcoming year. The information from this resolution is what goes into the annual report that gets filed online. Note that it is no longer mandatory in British Columbia to have corporate officers (such as a President or Secretary). However, we find that in a company's dealings with third parties it can often be useful to have at least a "President" appointed, so give some thought to maintaining at least one officer.

In order to effectively waive the auditor of the company (something you'll want to do, since for most private corporations audited financial statements are too expensive), remember that all voting and even non-voting shareholders must sign the resolution waiving appointment of the auditor. The waiver is required because the default under the Business Corporations Act BC is for the company to have an auditor.

Once both resolutions are signed, be sure to file them under the correct tab in your corporate records book. The shareholder resolution goes under the "Shareholder [or Members] Minutes" tab and the director resolution goes under the "Director Minutes" tab. Once you have a copy of these resolutions, they can be done quickly each year, as the information in them will only change where there is a change to the shareholders, directors or officers of the company.

Doing the annual shareholder and director resolutions and filing the annual report is something that will keep your company in "good standing" and thus alive for as long as you choose to have the company. The documents are fairly simple. If you need our help, be sure to call or e-mail us.