Alberta could become the first Canadian province to offer corporate opportunity waivers as part of the proposed new amendment

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The proposed amendments to the Alberta Business Corporations Act would make it easier for directors of private corporations to engage in multiple businesses and related investments at the same time.

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Under the proposed amendments, introduced in the legislature on Monday, Alberta would become the first jurisdiction in Canada to allow corporations to create “corporate opportunity waivers” that set rules about when directors can participate in multiple related projects.

Alberta Service Minister Nate Glubish said that often when private equity funds make a large investment in a company, they apply for a board seat or two. At the same time, it is not uncommon for members of these funds to be involved in multiple related businesses in which they have experience, he said.

Under the status quo, directors would need permission from the original company they invested in before they could undertake another project.

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“What the concept of a corporate opportunity exemption would do is allow the company that is raising that capital to say … we can give you a very narrow, well-defined exemption that says under what circumstances you can go in and make these other investments,” he said. Glubish.

Speeding up the process is one way to attract more business and investment to Alberta, Glubish said.

“The key for me is to say, well, as a government we want to try to give Alberta companies as many tools as possible to attract as much capital as possible, especially if they are attracting it from outside Alberta. If not having access to corporate opportunity exemptions puts certain private equity or venture capital funds out of their reach, then we would like to provide them with this tool, ”he said.

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Although Alberta would become the first jurisdiction in Canada to offer these types of exemptions, similar legislation exists in some parts of the United States.

Specific agreements on how a waiver could be used in Alberta will be part of the regulations that have yet to be drafted. Glubish said there will be a requirement that the exemptions be included in a unanimous shareholder agreement or as part of the company’s articles of incorporation.

The legislation would also introduce changes to the role of directors. Directors are currently required to disclose and abstain from voting when they have a material interest in any contract or transaction. Under the new legislation, the directors would still have to disclose the potential conflict of interest, but could still vote if it is decided that their interests are in line with those of the company.

The legislation would also double the timeframe for dissolved corporations to return to operation to 10 years and make changes to the shareholder approval process.