Monday, June 7, 2010

Exemption from the Audit requirement under the CBCA and BCA (Ontario)

As you might be aware, Under the Canadian Business Corporations Act ("CBCA") and the Business Corporations Act it is possible to waive the audit requirements. For SME's (small & medium entreprises) it can be costly to have audited financial statements (minimum $5000- $7,500 up to $100,000 and more...) Therefore, it's possible to pass a annual resolutation to waive the obligation of appointing an auditor. The resolution MUST be signed by ALL the shareholders of the corporation (please see below for the listed conditions). Further, Please ensure that you review your minute book and that you have a resolution for EACH year since the incorporation date of your business. Once you have your annual resolution signed by all the shareholders, it will give you the options of getting notice to reader statements or engagement review, these 2 options are cheaper.

Here are the proper sections of each Act (federal and provincial):

Canada Business Corporations Act ( R.S., 1985, c. C-44 )

Dispensing with auditor
163. (1) The shareholders of a corporation that is not a distributing corporation may resolve not to appoint an auditor.

(2) A resolution under subsection (1) is valid only until the next succeeding annual meeting of shareholders.

Unanimous consent
(3) A resolution under subsection (1) is not valid unless it is consented to by all the shareholders, including shareholders not otherwise entitled to vote.

Business Corporations Act

148 . In respect of a financial year of a corporation, the corporation is exempt from the requirements of this Part regarding the appointment and duties of an auditor if,

(a) the corporation is not an offering corporation; and

(b) all of the shareholders consent in writing to the exemption in respect of that year. 1998, c. 18, Sched. E, s. 23.

1 comment:

John Evers said...

For a Not for Profit corporation in Ontario. Would the signatures of all the members of the BOD be sufficient to be exempt from the audit?