It is important to file the annual update prescribed by law with the Enterprise Registrar (or with Corporations Canada, for federal corporations), in order to avoid late penalties, but also to avoid the dissolution of the corporation. corporation is dissolved. In fact, section 59 of the Act respecting the legal publicity of enterprises provides that any failure to file the annual update for two consecutive years may result in the dissolution of the corporation, if it is incorporated under the Quebec regime. The federal Act also provides for such dissolution for federally incorporated companies.
Although the law provides that the corporation will be deemed to continue to exist for the purposes of any judicial or administrative proceeding, it will be important to regularize the situation so that the corporation is reconstituted. Otherwise, if the corporation continues to carry on business while legally dissolved, there may be significant risks, particularly with respect to the limited liability of shareholders and the protection of the corporate name.
Fortunately, there is a mechanism in place by law for the corporation to resume its legal existence. The penalty fees incurred as a result of the delays will have to be paid, and the required annual updates will have to be filed with the Registrar. Finally, an application for revival form must be filed to formally request that the corporation be revived. The Act provides that the revival of the corporation is retroactive, so that the corporation will be deemed to have never ceased to exist.
In order to avoid the above inconveniences caused by delays in the annual updates, it is important for any corporation to follow up on the notices it receives requiring it to file its annual update. Alternatively, the company can hire a professional to ensure that the company is in good standing with respect to the annual updates.