Alberta could become the first province in Canada to offer corporate opportunity waivers as part of new proposed amendment
Proposed amendments to Alberta’s Business Corporations Act would make it easier for directors of private corporations to be involved with multiple related businesses and investments at the same time.
Under the proposed amendments, tabled in the legislature on Monday, Alberta would become the first jurisdiction in Canada to allow corporations to create “corporate opportunity waivers” which set out rules for when directors can be involved in multiple related projects.
Service Alberta Minister Nate Glubish said that often when private equity funds make a large investment in a company they will request a seat or two on the board. At the same time, it is not uncommon for members of these funds to be involved in multiple related businesses that they have an expertise in, he said.
Under the status quo, directors would need permission from the original company they invested in before they could take on another project.
While Alberta would become the first jurisdiction in Canada to offer these kind of waivers, similar legislation exists in some parts of the United States.
Specific deals about how a waiver could be used in Alberta will be part of regulations that have yet to be written. Glubish said there will be a requirement that the waivers are embedded in a unanimous shareholders agreement or part of a company’s articles of incorporation.
The legislation would also make changes to the role of directors. Currently, directors are required to disclose and abstain from voting where they have a material interest in any contracts or transactions. Under the new legislation, directors would still have to disclose the potential conflict of interest but would still be able to vote if it is decided that their interests are in line with the company’s.
The legislation would also double the timeframe for dissolved corporations to get back into business to 10 years, and make changes to the shareholders’ approval process.