The Business Corporations Act sets out the legislative requirements for business corporations to incorporate and operate in Saskatchewan.
A corporation is the most common form of business organization. However, certain specific corporations, such as credit unions, co-operatives and insurance companies, may be incorporated or registered under separate legislation.
A corporation is recognized as a separate legal entity having rights, privileges and liabilities distinct from those of its owners. This means that the corporation has the same legal capacities as a natural person (e.g., to conduct business).
One or more persons can incorporate by filing Articles of Incorporation with the Director of Corporations. Articles of Incorporation must set out:
- the name of the corporation;
- the classes and any maximum number of shares the corporation is authorized to issue;
- any restrictions on the right to transfer shares;
- the number of directors; and
- any restrictions on the business the corporation may carry on.
Unless exempted, every extra-provincial corporation carrying on business in Saskatchewan must be registered.
The major provisions of the Act include:
- restrictions on the use of corporate names. (e.g., a corporate name cannot be identical or so similar to the name of another firm as to cause confusion or suggest a connection with any government or political party in Canada);
- the capacity and powers of a corporation. (e.g., corporations have the capacity and powers of a natural person, and can borrow money and be plaintiffs or defendants in legal actions);
- directors' qualifications, whether they are elected or appointed, and guidelines for removal from office (e.g., at least 25% of the directors must be resident Canadians);
- directors' and officers' liability (e.g., directors who consent to illegal corporate action, such as payment of dividends which would cause the corporation to become insolvent, must indemnify the corporation for any loss);
- shareholder rights (e.g., holders of not less than five per cent of voting shares may require directors to call a shareholders' meeting for particular purposes, and shareholders may apply to court to have the corporation investigated);
- stock (e.g., shares must be without par value, and corporations are required to maintain separate capital accounts for each class or series of shares issued);
- meetings (e.g., directors must call annual shareholder meetings within 18 months of formation and within 15 months of the preceding annual meeting, and the articles or bylaws of a corporation may allow for electronic meetings of shareholders as well as electronic transmission of certain documents);
- records (e.g., shareholders and creditors can examine the records during usual business hours, including articles, bylaws, amendments, minutes of meetings and shareholders' resolutions);
- filings and returns (e.g., annual returns, articles of amendment); and
- dissolution (e.g., a corporation may be dissolved by special resolution of the shareholders).
Amendments to the Regulations in 2006 provide the qualifications for auditors who prepare financial statements, and allow corporations to communicate with shareholders electronically.