Annual resolutions instead of an AGM: the yearly paperwork for BC private companies

If you own a small BC company, your accountant or lawyer may send you a short package of resolutions to sign every year. Those pages do real work: they stand in for the annual general meeting the Business Corporations Act would otherwise require.

This article explains how the written-resolution route works, what it normally covers, and the common gaps that leave a minute book incomplete.

The Act expects an annual general meeting

Section 182(1) of the Business Corporations Act requires a company to hold its first annual general meeting within 18 months after it is incorporated or otherwise recognized. After that, it must hold one at least once in each calendar year, and not more than 15 months after the annual reference date for the previous year.

For a company with one or a few shareholders, an actual meeting is usually a formality. The Act lets the shareholders deal with it in writing instead. Under section 182(2), all of the shareholders entitled to vote at the meeting may, by unanimous resolution, consent to all of the business that the meeting would have dealt with, or waive holding the meeting. If they do either, section 182(5) says the company need not hold that meeting.

A "unanimous resolution" is defined in section 1 of the Act as one passed by being consented to in writing by all of the shareholders entitled to vote on it. One missing signature means the resolution has not passed. The annual resolutions sit alongside the other yearly tasks in our BC company annual compliance checklist.

Choosing the annual reference date

When shareholders use a unanimous resolution in place of the meeting, section 182(3) requires them to select the company's annual reference date: a date that would have been an appropriate date for that year's meeting under the timing rule in section 182(1). That date matters. It fixes when the financial statements are due and when an auditor must be appointed, and it starts the 15-month clock for the following year.

The annual reference date is not the same as the annual report deadline. Section 51 separately requires the company to file an annual report with the registrar within two months after each anniversary of the date it was recognized. Signing the resolutions does not file the annual report, and filing the annual report does not replace the resolutions.

What usually goes in the shareholders' resolution

The exact contents depend on your articles and your company's circumstances, but a typical annual shareholders' resolution deals with these items:

• Consent or waiver. The shareholders consent to the business of the annual general meeting, or waive the meeting, under section 182(2).
• Annual reference date. The date selected under section 182(3).
• Financial statements. Under section 198, the directors must produce and publish financial statements for the latest completed financial year on or before each annual reference date. Section 200 lets the shareholders waive that obligation by unanimous resolution, and the waiver covers those statements only.
• Auditor. Section 203(1) says a company must have an auditor. Under section 203(2), all of the shareholders may waive the appointment of an auditor by unanimous resolution, and section 203(3) makes that waiver effective for one financial year only, so it is repeated each year.
• Directors. If your articles provide that directors' terms end at each annual general meeting, the resolution elects or confirms the directors for the coming year. Section 128 ties a director's term to the Act, the articles and the terms of the director's election, so check what your articles say.

Note the wording in sections 200 and 203: the financial statement and auditor waivers must be given by all of the shareholders, whether or not their shares otherwise carry the right to vote. If your company has issued non-voting shares, for example to family members for tax planning, those holders must sign the waivers too.

The directors' side of the paperwork

Some of the yearly work belongs to the directors rather than the shareholders. If the financial statements are not waived, section 199 requires the directors to approve them and to have one or more directors sign them before they are published. Directors can act without a meeting: under section 140(3), a resolution is passed if every director entitled to vote on it consents to it in writing.

Many companies pair the annual shareholders' resolution with a directors' resolution that approves the financial statements, confirms officers, and records any other decisions made during the year. Decisions such as declaring a dividend need their own resolution; see our article on paying dividends from a BC company.

File it in the records office

Signed resolutions are only useful if you can find them. Section 42(1) requires a company to keep at its records office a copy of each consent resolution of shareholders and each consent resolution of the directors, along with the registers and other records the section lists. A buyer, lender or the Canada Revenue Agency may ask to see them, often years later. Our article on what must be in a BC company minute book covers the rest.

Common gaps, and catching up

• Missed years. It is common to find that no resolutions were signed for several years. Section 182(2)(c) allows the shareholders to waive not only the current meeting but the previous one and any earlier meeting the company was obliged to hold, so a catch-up resolution is often possible. Each missed year's financial statement and auditor decisions still need to be addressed.
• A shareholder who will not sign. If unanimity is not possible, the written route is not available. The company may have to hold an actual meeting, or apply to the registrar under section 182(4) for permission to hold it later.
• Signatures from the wrong people. Resolutions signed only by the directors, or by some of the shareholders, do not meet the unanimity requirement.
• Changes during the year. Share issuances, transfers and director changes should be documented when they happen, so the annual resolutions match the registers.

Want your company's annual resolutions prepared each year?

Our business lawyers can prepare the yearly shareholders' and directors' resolutions, check them against your articles and share structure, and bring an incomplete minute book up to date.

Call 604-259-2844 or send us a message to arrange a consultation at our Vancouver office.