We sat down with Peter Goode, Corporate Lawyer & Fractional General Counsel at Caravel Law, to discuss how Alberta is attempting to accelerate investment and economic growth in the province.
To help its economy recover in the wake of COVID-19, the Government of Alberta has taken significant steps to encourage investment and economic growth in the province. These include changes to Alberta’s corporate law statute and corporate tax rates.
Removing residency requirements for corporate directors
Recent amendments to Alberta’s Business Corporations Act (ABCA) includes the removal of Canadian residency requirements for corporate directors.
Under the previous legislation, 25% of a corporation’s directors needed to be resident Canadians. This requirement was seen as an obstacle for foreign investors who didn’t reside in the province and subsequently chose to incorporate in other provinces that didn’t have the same residency restrictions.
By removing the residency requirement for corporate directors, this amendment brings Alberta in line with British Columbia, Quebec, Nova Scotia, New Brunswick, Prince Edward Island, Yukon, Northwest Territories, and Nunavut.
Unlike some other Canadian jurisdictions, Alberta’s corporate statute is modern legislation, which will be familiar to American and international businesses that have incorporated in the US, as many of its principles can also be found in Delaware’s General Corporation Law.
Reducing the corporate tax rate
While the removal of the residency requirement will certainly help Alberta become a more appealing option for foreign investors looking to set up shop in Canada, the real pull comes from changes to the province’s corporate tax rate.
In June 2020, the Government of Alberta announced Alberta’s Recovery Plan, a stimulus package designed to support businesses recovering from COVID-19. The plan included reducing the province’s general corporate tax rate from 10% down to 8%.
This new lower tax rate makes Alberta’s combined federal and provincial general corporate tax rate the lowest in the country at 23%. With the Biden Administration and a new Congress in the United States in favour of higher corporate tax rates, it is possible that Alberta may soon have the lowest corporate tax rate in North America.
These two key changes – the corporate tax rate reduction and the removal of the residency requirements for corporate directors – strengthen Alberta’s position as an attractive location for international businesses to incorporate and do business in Canada.
Assigning an ‘Agent of Service’
While the new legislation allows all directors of a company to reside outside Canada, it does require that incorporating businesses assign an agent of service – who is a resident of Alberta – to represent their organization.
This agent will accept services on behalf of the company and provide an alternative to ‘serving’ a company with documents. This means official government notices, legal claims and other documents will be deemed to have been legally served if sent to the agent for service.
The right legal support for your business entry into Canada
If you’re looking to do business in Canada and need legal support, you’ll want to work with a lawyer that is familiar and experienced with navigating the country’s legal, regulatory and business environment. This includes knowledge of licensing, interprovincial trade barriers, provincial and federal regulations, as well as experience within your organization’s sector. Caravel has lawyers based in Alberta and other major centres in Canada ready to help make your entry successful and efficient.
If you don’t need full-time legal support, consider hiring fractional in-house counsel to manage your legal requirements and act as an agent of service for your business. These options provide experienced and skilled legal support at a fraction of the cost of traditional legal service providers.
Need help setting up a corporation in Alberta or elsewhere in Canada? Caraval Law is an alternative legal firm with over 50 qualified and experienced lawyers to help support your legal needs. Get in touch with our team today to find out more.
The information provided in this article is not intended to be legal advice. Many factors unknown to us may affect the applicability of this content to your particular circumstances.