ARCHIVED — Regulatory Impact Analysis Statement

(This statement is not part of the Regulations.)

Issue and objectives

The Standing Joint Committee on the Scrutiny of Regulations (SJC) reviews matters of legality and the procedural aspects of federal regulations. The SJC has reviewed the Canada Business Corporations Regulations, 2001 (CBCR) and the Canada Co-operatives Regulations (Coop Regulations) and some issues have been raised. The proposed regulations address the issues related to Part 2 (corporate names) of both the CBCR and Coop Regulations and propose to add a new section 72.1 of the CBCR and 38.1 of the Coop Regulations. Further changes to the CBCR and to the Coop Regulations may be proposed at a later time to address other concerns raised by SJC.

The objective of the proposed changes is to clarify the rules for the granting of names to corporations and cooperatives. The proposed regulations should be clearer and easier to read while resolving any concerns with the drafting language used. This also includes a new section in both sets of Regulations to resolve concerns about the name of a corporation or cooperative resulting from a short-form amalgamation.

Description and rationale

The Canada Business Corporations Act (CBCA) and its Regulations (CBCR) and the Canada Cooperatives Act (Coop Act) and its Regulations, the Coop Regulations, provide the corporate governance framework, including name granting rules, for corporations and cooperative incorporated or continued under their respective act.

The name-granting rules are similar for corporations and for cooperatives and are found in Part 2 of both set of regulations.

In its review of the CBCR and the Coop Regulations, SJC identified grammatical errors, and, in their opinion, highlighted some sections that contained unclear references to the respective Acts. Instead of trying to address individual aspects from the SJC’s review, the proposed regulations will rewrite Part 2 in both the CBCR and Coop Regulations. These proposed changes do not make substantive changes to the name granting regulations. Instead, they make these rules clearer and easier to read while resolving the SJC concerns. In particular, the sections in Part 2 will be rearranged to provide a more logical approach.

The proposed approach is to first provide the provisions related to the interpretation of Part 2. The next set of provisions sets out the concept of “confusing names” and related provisions, including the exceptions to that concept. The following set of provisions is related to general prohibitions for corporate names (e.g. prohibition on the phrase “Parliament Hill” and on names connoting royal patronage). The final set of provisions concerns non-distinctive and deceptively misdescriptive names.

Another proposed amendment creates a new section 72.1 of the CBCR and 38.1 of the Coop Regulations. Those sections will permit a corporation or cooperative resulting from a vertical short-form amalgamation to have any approved corporate name and not be restricted to the corporate name of the amalgamating corporation or cooperative whose shares are not cancelled. Also, a corporation resulting from a horizontal short-form amalgamation will not be limited to the corporate name of the holding corporation. The proposed amendments will give more flexibility to the corporations or cooperatives regarding the choice of the corporate name in an amalgamation case.

Consultation

On May 12, 2009, a notice was put on Corporations Canada’s Web site about regulatory amendments being considered for the CBCR that would replace Part 2 — corporate names and add a new section 72.1 to the CBCR. This notice was also sent by email to 3 500 stakeholders who have requested that all notices from the Director be sent to them by email. A 45-day comment period was provided and no comments were received; consequently no issues with the proposed regulations have been raised.

Contact

Isabelle Breault
Corporations Canada
Industry Canada
Jean Edmonds Tower South, 9th Floor
365 Laurier Avenue W
Ottawa, Ontario
K1A 0C8
Telephone: 613-941-5753
Fax: 613-941-5781
Email: Isabelle.Breault@ic.gc.ca