- Alberta will be the first province in the country to let businesses create “corporate opportunity exemptions.”
- Glubish believes that speeding up the process will help Alberta attract more business and investment.
Alberta’s Business Organizations Act is being amended to make it simpler for directors of private corporations to be active in many linked enterprises and investments at the same time.
Alberta will become the first jurisdiction in Canada to allow corporations to develop “corporate opportunity exemptions,” which spell out limits for when directors can be involved in numerous connected initiatives under the proposed revisions, which were tabled in the legislature on Monday.
Service Private equity groups frequently request a seat or two on a company’s board of directors, according to Alberta Minister Nate Glubish.
At the same time, members of these funds are frequently involved in many linked enterprises in which they have experience, he noted.
Directors would need authorization from the first firm they invested in to take on another project if things stayed the same.
“What the concept of a corporate occasion waiver would do is allow that corporation seeking the cash to say… we can give you a very restricted and clearly defined waiver that says under what circumstances you may go in and make these other investments,” Glubish explained.
Glubish believes that speeding up the process will help Alberta attract more business and investment.
“The essential thing for me is to emphasize that as a government, we want to provide Alberta companies as many tools as possible to attract as much capital as possible, especially if it’s coming from outside of Alberta.”
We’d like to give them this power if not having access to corporate opportunity waivers prevents them from accessing certain private equity or venture capital funds,” he said.
While Alberta would be the first province in Canada to allow such exceptions, similar legislation already exists in the United States.
Specific agreements regarding how a waiver could be used in Alberta will be included in yet-to-be-written regulations. The waivers will have to be included in a unanimous shareholders agreement or part of a company’s articles of organization, according to Glubish.
In addition, the act would alter the position of directors. Directors are already required to disclose and abstain from voting in any contracts or transactions in which they have a substantial interest.
Directors would still be required to report potential conflicts of interest under the new rules, but they would be entitled to vote if it is determined that their interests are aligned with the companies.
The bill would also extend the time for dissolved firms to reopen to ten years and make adjustments to the shareholder approval procedure.
Source: CTV News
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