The importance of Corporate annual resolutions and annual returns

This article summarizes one of the most important corporate requirements for all corporations governed by the Business Corporations Act (Ontario) (“OBCA”) and the Canada Business Corporations Act (“CBCA”).

What is it?

Pursuant to the OBCA and CBCA, every corporation, big or small, incorporated federally or in Ontario, must, on annually basis:

• prepare annual resolutions; and
• file an annual return.

Annual returns are government filings that helps keeps the government registry up to date.

Annual resolutions are approval documents required by the acts, whereby the directors and shareholders:

(i) approve financial statements;

(ii) approve directors executing the financial statements;

(iii) approve financial statements being shown to the shareholders;

(iv) election of directors;

(v) appointment of accountants; and

(vi) exemption the corporation from audit requirements.

These are not your income tax return. These are corporate law requirement and completely separate from any filing obligations you may have with the Canada Revenue Agency (CRA) or your accountants.

What if I don't file?

Both Acts require annual corporate resolutions to be maintained and it is an offense not to maintain corporate records. Furthermore, your corporation may be dissolved if it fails to file its annual returns. If your corporation is not filing its annual returns, it will be assumed that it is not operating and will be dissolved. Dissolution can have serious repercussions, including not having the legal capacity to conduct business.

What do I do?

If you have not maintained annual resolutions for your corporation, you should address this issue immediately. Our team at Marwah Law can track the timelines, prepare your documents and help you file annuals returns, to ensure your corporate records are up to date. Get in touch with us to learn more.