Corporate law

How BC law treats it

Most BC companies are incorporated under the Business Corporations Act, SBC 2002, c 57 (BCBCA), by filing an incorporation application and notice of articles with the Registrar of Companies. The BCBCA governs share structures, directors and officers, meetings, records, amalgamations, arrangements, dissolution and shareholder remedies, including the oppression remedy (s. 227) and derivative actions (ss. 232 to 233). A business may instead incorporate federally under the Canada Business Corporations Act, but that is federal law and the company must then register extraprovincially to carry on business in BC. A company is a separate legal person from its shareholders (Kosmopoulos v Constitution Insurance Co, [1987] 1 SCR 2), and shareholders are generally not liable for its debts. Failing to hold meetings or keep records does not, by itself, remove limited liability. It can lead to compliance problems and, if annual reports are not filed, dissolution by the Registrar. Mixing personal and company funds can be evidence in a veil piercing case and can cause tax and director liability problems, but Canadian courts disregard the corporate form only in narrow cases, such as where the company is a sham or is used to commit fraud or other improper conduct. The US alter ego and formalities doctrine is not BC law. Corporate law overlaps with securities law (the BC Securities Act and national instruments, including prospectus exemptions for private placements), tax law and the broader body of commercial law, such as contracts, the Sale of Goods Act and the Personal Property Security Act.

What it means for your business

Corporate law decides who controls the business, how profits and shares are divided, and when owners and directors are personally at risk. Choosing between a sole proprietorship, partnership and company, structuring share classes and documenting decisions properly affects tax, fundraising and exits. Understanding that limited liability is strong but not absolute helps owners avoid personal guarantees and conduct that exposes them, without worrying about US myths. Example: A Richmond importer incorporates under the BCBCA with two share classes so a family holding company can receive dividends. Years later, when a shareholder dispute arises, the articles and a shareholders agreement decide how the minority's shares are valued and bought out.

Risks and common mistakes

Assuming US concepts such as LLCs or alter ego veil piercing apply in BC. Incorporating federally without understanding that the company must also register extraprovincially in BC. Believing limited liability protects owners who sign personal guarantees for company debts. Issuing shares to friends or investors without checking securities law prospectus exemptions. Letting annual reports lapse until the Registrar dissolves the company.