Annual General Meetings & The Business Corporations Act, 2021: It may not be as simple as you think

In accordance with The Business Corporations Act, 2021 (the “Act”), every Saskatchewan corporation must hold annual general meetings of its shareholders (an “AGM”). The purpose of an AGM is to consider the financial statements and auditor’s report (if any), elect directors and appoint an auditor (or waive such appointment). Any other business that may come before the meeting is deemed special business and is subject to additional requirements.

The Act provides both the timelines for holding an AGM and the documents that must be distributed by a corporation in advance of an AGM. In addition, a corporation’s Articles and Bylaws may have other requirements, so it is important to review both legislation and corporate documents.

A corporation is required to have its first AGM within 18 months of incorporation and each succeeding AGM within fifteen months of the prior AGM. Notice of such meeting must be provided to each shareholder entitled to vote at the AGM, each director, and the auditor of the corporation (if any) not less than 21 days and not more than 50 days in advance of the scheduled meeting date. The Act permits a corporation (so long as it is not a distributing corporation) to shorten this notice period if the corporation’s Articles or Bylaws provide for such shorter period. Further, this notice period may be formally waived or abridged at any time with the consent in writing of the person entitled to receive the notice. The Act sets out the requirements for form of notice and delivery methods, which now include (if certain conditions are met) electronic transmission or posting on a website or file hosting service.

In advance of every AGM, a corporation may, but is not required to, fix a record date for the purpose of determining the shareholders entitled to receive notice of the AGM. The record date cannot be more than 50 days nor less than 21 days in advance of the AGM and if no record date is fixed, is deemed to be the close of business on the day before the AGM. Reasons for setting a record date may be if a corporation’s shareholdings are subject to fluctuation or if a corporation is closing an offering within the timeframe for notice of the AGM. Once the record date is determined, the corporation must prepare a list of the shareholders entitled to receive notice, arranged in alphabetical order, along with their respective shareholdings. Any shareholder in attendance at the AGM is entitled to examine this list and as such, it must be physically present at the AGM.

For most corporations, notice of an AGM must include the time and place of the meeting, the nature of the business that is to occur as well as the annual financial statements of the corporation. However, it is important to note that the rules surrounding notice and the level of required disclosure become significantly more stringent where a corporation is a distributing corporation or where a corporation has more than fifteen shareholders. In such instances, the corporation is required to solicit proxies and disclose additional information in the form and content prescribed by legislation and certain other regulations and instruments.

As an alternative to the above steps, the Act does allow a corporation to obtain a resolution in lieu of meeting, which will handle the typical AGM matters, such as electing directors and appointing an auditor (or waiving such appointment). This resolution is typically the route that closely held corporations will take, but it must be signed by all shareholders that would be entitled to vote at the AGM to be effective.

Should a corporation fail to comply with the requirements outlined in the Act, any director or officer of the corporation who directed, authorized, acquiesced in, or participated in the commission of the offence is liable on summary conviction to the following penalties:

  • a fine of not more than $10,000
  • imprisonment for a term of not more than 6 months; or
  • both the fine and imprisonment.

In closing, the above provides a general overview of the requirements that must be satisfied by corporations with respect to AGMs. It is important to note that several other factors can come into play that are not discussed here, including shareholder proposals and dissident proxies, which have their own requirements and timelines that can dramatically impact the AGM process.

To gain clarity on where you corporation falls with respect to AGM requirements and to ensure compliance, please contact the lawyers at Lakefield LLP for a review of your corporate documents and to learn what other steps your corporation may need to take in advance of your AGM.

The information in this article does not constitute legal advice. The law may have changed since this article was first published. You should consult with your lawyer to confirm the current state of the law and obtain advice specific to your situation.