Every corporation subject to the Canada Business Corporations Act (CBCA) must file an annual return with Corporations Canada. This essential task ensures legal compliance and maintains transparency within the corporate landscape of Canada. In this article, we will delve into the reasons behind the need to file an annual return, the appropriate timelines, and the potential consequences of failing to file. Additionally, we’ll cover the new requirement regarding individuals with significant control (ISCs).
Why You Need to File an Annual Return
Filing an annual return is not just a bureaucratic necessity but a legal obligation under the CBCA. This process ensures that Corporations Canada has the most current information about your corporation, which is crucial for public transparency. Accurate and up-to-date information helps investors, consumers, financial institutions, and other stakeholders make informed decisions about your corporation.
Legal Requirement and Corporate Status
It’s important to understand that filing an annual return is a corporate law requirement separate from any tax filings with the Canada Revenue Agency (CRA). Every corporation listed as “active” in Corporations Canada’s database (i.e., not dissolved, discontinued, or amalgamated) is required to file an annual return.
Filing Information on Individuals with Significant Control (ISCs)
Since January 22, 2024, corporations under the CBCA must also file information about their individuals with significant control (ISCs) along with their annual return. This filing must occur within 60 days of the corporation’s anniversary date. This new requirement aims to enhance transparency and accountability by identifying individuals who have significant control over the corporation.
When to File Your Annual Return
The deadline for filing an annual return is within 60 days following the corporation’s anniversary date—the date your corporation was incorporated, amalgamated, or continued under the CBCA. This date can be found on your corporation’s Certificate of Incorporation, Amalgamation, or Continuance, or through Corporations Canada’s online database.
Key Steps for Filing
- Gather Information: You will need the date of your last annual meeting, your corporation type (distributing or non-distributing), and authorization if you are a director, officer, or authorized individual.
- File Online: The quickest method to file your annual return is through the Corporations Canada Online Filing Centre. Note that a fee is associated with filing, which can be found on the Corporations Canada website.
Consequences of Not Filing
Failing to file the annual return on time will result in the corporation’s status being marked as “overdue” in the online database, and the corporation will be unable to obtain a Certificate of Compliance. Persistent non-compliance can lead to the dissolution of the corporation, effectively ending its legal existence and ability to conduct business.
Late Filing and Dissolution Process
If a corporation fails to file its annual return for one year, it risks dissolution. However, Corporations Canada typically only dissolves a corporation after two years of non-filing. Before dissolution, a final notice is issued, providing an additional 120 days to comply.
Special Considerations
Small Corporations
Regardless of size, every corporation must file an annual return. Accurate information about all corporations, big or small, is essential for the integrity of the public database.
Non-Operating Corporations
Even if a corporation is not currently operating, it must still file an annual return if its status is “active.” To cease filing obligations, a corporation must go through the dissolution process to legally terminate its existence.
Annual Meetings of Shareholders
The CBCA mandates that all corporations hold at least one annual meeting of shareholders. During this meeting, shareholders review financial statements, consider the auditor’s report, appoint the auditor, and elect directors if necessary. For small corporations with few shareholders, a written resolution signed by all shareholders can substitute a formal meeting.
Filing Reminders
Corporations Canada sends personalized reminders when the annual return is due. If a corporation does not file on time, a default notice is sent approximately 90 days after the anniversary date. Subscribing to the Annual Return Reminder Emails service ensures these reminders are received via email.
Conclusion
Adhering to the annual return filing requirements under the CBCA is crucial for maintaining the legal status and good standing of your corporation. By keeping accurate and up-to-date records, corporations contribute to a transparent business environment that benefits all stakeholders. Always ensure to update your registered office and any additional addresses with Corporations Canada to receive timely reminders and avoid the risk of dissolution.
