Alberta's Bill 84, Business Corporations Amendment Act ("Bill 84"), which received Royal assent on December 2, 2021 and is expected to come into force in early 2022, amends the Business Corporations Act to provide more flexibility for Alberta corporations to use plans of arrangement in Alberta.
A plan of arrangement is a court-approved procedure permitting corporate reorganizations, mergers and acquisitions, or other fundamental changes such as debt restructuring. Before the amendments, Alberta corporations would often seek a "continuance" to change their jurisdiction to be governed by the federal legislation, Canada Business Corporations Act ("CBCA"), to take advantage of additional flexibility permitted under that Act. The amendment will eliminate this added step.
There were two main flexibilities under the CBCA that made it more attractive than the ABCA, but Bill 84's amendments effectively eliminated the differences. First, upon application for a plan of arrangement, Alberta courts can now grant "any interim or final order it thinks fit" which includes a "stay of proceedings". A stay of proceedings is a court order preventing others from advancing litigation, often used to buy time in bankruptcy and restructuring. Obtaining a stay of proceedings at the outset of a plan of arrangement gives the corporation time to complete the plan of arrangement without being obstructed by creditors or other claimants. This may protect the corporation as it can avoid responding to multiple legal proceedings – which can be particularly beneficial for corporations experiencing financial difficulty and who use the plan proceedings as an alternative to other creditor protections such as those offered through bankruptcy proceedings.
Second, the requirement for 100% shareholder approval of a plan of arrangement, where shareholder approval would not otherwise be required, has been removed by Bill 84's amendments. Rather, Alberta courts are granted the discretion to decide whether or not shareholder approval will be required.
It is anticipated that these amendments will reduce the number of Alberta corporations who apply for a continuance specifically related to plans of arrangement, because the ABCA will offer the same flexibility as the CBCA.
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