Upcoming Changes to the Alberta Business Corporations Act - Increased Protection for Directors and Officers in Alberta

Written by: Carly Toronchuk

On December 2, 2021, Bill 84: Business Corporations Amendment Act (the “Bill”) received Royal Assent.

The Bill makes several changes to the Alberta Business Corporations Act, RSA 2000, c B-9 (the “ABCA”) that are not yet in effect. There is no precise date announced for when these amendments will come into force, please check back for updates.

Amongst various other changes, the Bill proposes numerous amendments to the ABCA which expand protections for Directors and Officers of Alberta corporations (the “Proposed Amendments”).

Interests in Transactions and Contracts

Under the current provisions of the ABCA, there are very limited circumstances where Directors and Officers may vote in matters relating to transactions or contracts that they have a personal interest in.

Under the new provisions, there is a proposed carve out which affords Directors and Officers a greater opportunity to participate and vote to approve transactions or contracts which they have an interest in. These include cases where the Directors and Officers are taking on an obligation for the benefit of the corporation, such as personally guaranteeing a loan.

Duty of Care – New Due Diligence Defence

The Proposed Amendments provide that a Director will not be found to have breached their duty of care if they can show that they relied on the “opinion or report of a person, including a lawyer, accountant, engineer, appraiser or employee of the corporation, whose profession or expertise lends credibility to a statement made by that person.”

This expands the current provisions of the ABCA by allowing Directors to rely on opinions/reports of their own employees, not solely those of “professional” expert, which practically makes sense given the expertise these employees may hold.

Indemnification of Directors

Currently, a corporation may indemnify a Directors and Officers for costs associated with a criminal, administrative, or civil action or proceeding, where that Director or Officer is a party, subject to certain exceptions.

The Proposed Amendments expand a corporation’s ability to indemnify a Directors and Officers to include:

- a proceeding or action where a Directors and Officers is involved, but not a named party; and

- investigative actions or proceedings.

If you have any questions regarding the Bill, the Proposed Amendments, and/or any further questions regarding your corporation please do not hesitate to contact Roshan Kalra, Partner & Corporate Team Lead, at SB LLP.

*Disclaimer: This article is not intended to provide legal advice and is for information purposes only. Further, and as noted within, the Proposed Amendments have not yet taken effect.