Time Limits and Other Periods Act (COVID-19) (Canada): Corporate Implications of New Ministerial Order | Practical Law

Time Limits and Other Periods Act (COVID-19) (Canada): Corporate Implications of New Ministerial Order | Practical Law

On July 27, 2020, An Act respecting further COVID-19 measures (formerly Bill C-20) received Royal Assent and passed into law. Embedded as Part 3 of Bill C-20 is a short statute called Time Limits and Other Periods Act (COVID-19) (New Act). The New Act sets up a mechanism for extending certain deadlines set out in various federal statutes, including federal corporate statutes. In particular, the New Act enables the Minister of Industry, Science and Economic Development (Minister) to extend certain deadlines imposed on corporations subject to the Canada Business Corporations Act, R.S.C. 1985, c. C-44 (CBCA), the Canada Not-for-profit Corporations Act, S.C. 2009, c. 23 (CNCA) and certain other federal corporate statutes. On August 5, the Minister issued an order (Ministerial Order) under the New Act covering time periods under the CBCA, CNCA and Canada Cooperatives Act, S.C 1998, c. 1.

Time Limits and Other Periods Act (COVID-19) (Canada): Corporate Implications of New Ministerial Order

by Practical Law Canada Corporate & Securities
Published on 05 Aug 2020 • Canada (Common Law), Quebec
On July 27, 2020, An Act respecting further COVID-19 measures (formerly Bill C-20) received Royal Assent and passed into law. Embedded as Part 3 of Bill C-20 is a short statute called Time Limits and Other Periods Act (COVID-19) (New Act). The New Act sets up a mechanism for extending certain deadlines set out in various federal statutes, including federal corporate statutes. In particular, the New Act enables the Minister of Industry, Science and Economic Development (Minister) to extend certain deadlines imposed on corporations subject to the Canada Business Corporations Act, R.S.C. 1985, c. C-44 (CBCA), the Canada Not-for-profit Corporations Act, S.C. 2009, c. 23 (CNCA) and certain other federal corporate statutes. On August 5, the Minister issued an order (Ministerial Order) under the New Act covering time periods under the CBCA, CNCA and Canada Cooperatives Act, S.C 1998, c. 1.
This Legal Update explains the effect that this New Act and Ministerial Order will have on federal corporations.

Background

The vast majority of federal corporations (other than those created by Special Act) are incorporated or continued under one of the following:
  • The Canada Business Corporations Act, R.S.C. 1985, c. C-44 (CBCA).
  • The Canada Not-for-profit Corporations Act, S.C. 2009, c. 23 (CNCA).
  • The Canada Cooperatives Act, R.S.C. 1998, c. 1 (CCA).
  • The Boards of Trade Act, R.S.C. 1985, c. B-6.
  • A statute governing a federal financial institution, namely the:
    • Bank Act, S.C. 1991, c. 46;
    • Cooperative Credit Associations Act, S.C. 1991, c. 48;
    • Insurance Companies Act, S.C. 1991, c. 47; or
    • Trust and Loan Companies Act, S.C. 1991, c. 45.
Except for the Boards of Trade Act, each of the other federal corporate statutes is, with respect to various corporate matters, closely modelled on the CBCA. It is, therefore, useful to approach a discussion of the effect of Time Limits and Other Periods Act (COVID-19) (New Act) from the vantage of its implications for a CBCA corporation. The implications for CNCA corporations and federal cooperatives will then follow.
Federal financial institutions are not covered by the New Act, which received Royal Assent and passed into law on July 27, 2020.
The New Act also provides that the Minister can by order suspend or extend certain time periods set out in the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (BIA) and the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36 (CCAA). However, on July 31, 2020, the Government issued a statement to the effect that no ministerial orders under section 7(1) or (2) of the New Act are planned at this time (see Bill C-20, An Act respecting further COVID-19 measures).
On August 5, 2020, the Minister issued an order that alters certain time periods under the CBCA, CNCA and CCA (see http://corporationscanada.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs08730.html) (Ministerial Order).

CBCA Deadlines

Section 133(1)

A CBCA corporation must hold an annual meeting of shareholders each year (section 133(1), CBCA). A special meeting is optional and depends on the reason for calling it (section 133(2), CBCA).
An annual meeting must be held within specified time frames. Excluding a corporation that is holding its first annual meeting, the annual meeting of a CBCA corporation must be:
  • Called within 15 months after holding the last preceding annual meeting but no later than six months after the end of the corporation's preceding financial year.
  • Held within six months from the end of last completed financial year.
    (Sections 133(1)(b) and 155(1)(a)(i), CBCA.)
A corporation has 18 months from the date of incorporation to hold its first annual meeting (section 133(1)(a)).
Under the CBCA, a corporation must obtain an extension order from the court if it cannot call the meeting within the earlier of 15 months after the last preceding annual meeting or six months after the end of the corporation's preceding financial year (section 133(3), CBCA).
The Ministerial Order extends these dates as summarized in Table 1 below.

Section 135(1)

Notice of the time and place of a meeting of shareholders must be given to each shareholder and director (and the auditor, if any) between 21 and 60 days before the date of the meeting (section 135(1), CBCA and section 43(2), Canada Business Corporations Regulations, 2001, SOR/2001-512 (CBCR)). The Ministerial Order did not need to extend this period because it runs off the date of the meeting of shareholders.

Section 155(1)

Financial statements must be presented at each annual meeting, and, to ensure that financial statements remain meaningful to the business to be conducted at the annual meeting (particularly the election of directors), those statements must relate to the period that ended within six months before the annual meeting or less (section 155(1)(a)(i), CBCA).
The Ministerial Order extended this deadline as described in Table 1 below.

Section 159(1)

A corporation must send a copy of the annual financial statements and auditor's report, if any, to each shareholder (other than a shareholder who has informed the corporation that they do not want to receive copies) at least 21 days before each annual meeting. The Ministerial Order did not need to extend this period because it runs off the date of the meeting.

Section 160(1)

Finally, a distributing corporation, any of the issued securities of which remain outstanding and are held by more than one person, must send a copy of the audited financial statements and auditor's report to the Director appointed under the CBCA. This financial information must be sent to the Director:
  • Within 21 days or less before the annual meeting.
  • In any event, within 15 months after the last preceding annual meeting and within six months or less after the end of the corporation's preceding financial year.
The Ministerial Order extends this deadline as described in Table 1 below.

Effect of the New Act and Ministerial Order

As a result of the New Act, the Minister of Innovation, Science and Industry (Minister) has the power to make an order suspending or extending the time limits in the CBCA described above or in the CBCR. Any order made under the New Act cannot extend past December 31, 2020. The total duration of a suspension or extension cannot exceed six months and, in all cases, must end on December 31, 2020 or earlier.
An order may, if it so provides, have retrospective effect but not before March 13, 2020 (which is two days after the World Health Organization declared that the 2019 novel coronavirus (COVID-19) was a pandemic).
The Ministerial Order issued under the New Act extends the requirements in the CBCA as set out in Table 1:
Table 1: Extensions of Deadlines Under the CBCA
CBCA Section Reference
Existing Deadline
Extension by Ministerial Order
133(1)(a)
A corporation must call its first annual meeting within 18 months from its date of incorporation.
A corporation incorporated on or after September 13, 2018 must call its annual meeting within 24 months of the date of its incorporation or December 31, 2020, whichever is earlier.
133(1)(b)
A corporation must call any other annual meeting within 15 months from the previous annual meeting and within six months from the end of its financial year.
A corporation must call its annual meeting within 21 months from when its previous annual meeting was held or December 31, 2020 (whichever is earlier) if its: 
  • Previous annual meeting was held on or after December 13, 2018.
  • Financial year ended on or after September 13, 2019. 
See also the effect of section 155(1)(a).
155(1)(a)(i)
The annual financial statements and auditor's report of a corporation submitted to shareholders must be current to within six months of the annual meeting.
The financial statements of the corporation and auditor's report, if any, presented to the 2020 annual meeting must be current to at least 12 months.
160(1)(b)
A distributing corporation must send a copy of its audited financial statements and auditor's report to the Director within 15 months from the previous annual meeting and within six months of the end of its financial year.
The corporation must still file its financial statements at least 21 days before the annual meeting is held (section 160(1)(a), CBCA). There is no change. The ultimate filing deadline in section 160(1)(b) is extended to as far as 21 months (or December 31, 2020, if sooner) if its: 
  • Annual meeting was held on or after December 13, 2018.
  • Financial year ended on or after September 13, 2019.
No suspensions or extensions were made under sections 135(1), 159(1) or 160(1)(a). In each of these cases, the deadline runs off the day that the annual meeting is held. Therefore, if the corporation is permitted an extension to hold its annual meeting, the period for sending notice to shareholders, directors and the auditor, if any, will autocorrect. Similarly, the period for sending financial information to shareholders and the Director will autocorrect.

Deadlines Under the CNCA and the CCA

The discussion above the proposed extension of deadlines under the CBCA applies equally to the extension of deadlines under the CNCA and the CCA. The Table below tracts the provisions of the latter statutes in relation to the discussion of the CBCA.
Table 2: Extensions of Deadlines Under the CNCA and the CCA
CBCA References
CNCA References
CCA References
133(1)(a)
Section 160(1)(a), CNCA; and section 61(1), Canada Not-for-profit Corporations Regulations, SOR/2011-223 (CNCR).
Section 50(1), CCA.
133(1)(b)
Section 160(1)(b), CNCA; and section 61(2), CNCR.
155(1)(a)(i)
Section 172(1)(a)(i), CNCA.
Section 247(1)(a)(i), CCA.
160(1)(b)
Section 176(1)(b), CNCA; and section 78(1) and (2), CNCR. The filing requirement under section 176 only applies to soliciting corporations.
Section 252(1)(b), CCA. The filing requirement under section 252 only applies to a distributing cooperative. The definition of "distributing cooperative" in the CCA is a close analogue of the distributing corporation as defined under the CBCA.

Extensions Under the Bankruptcy Act and CCAA

The New Act empowers the Minister to make various suspension and extension orders under the BIA and the CCAA. However, it appears that no ministerial orders are planned at this time (see Bill C-20, An Act respecting further COVID-19 measures).

Suspensions and Extension Orders

Practical Law Canada will continue to monitor the making of any suspension or extension orders under the CBCA, CNCA, CCA, the Boards of Trade Act, the BIA and the CCAA.