Business Corporations Act (BC) – Updated Guide

A corporation is a separate legal entity under British Columbia law. When a company is dissolved, it legally ceases to exist. This can occur for a variety of reasons—retirement, restructuring, tax efficiency, or simply because the company no longer has any purpose.

Under the Business Corporations Act (“BCA”), there are four primary ways a corporation can be dissolved:

1. Dissolution for failure to file annual reports (dissolution-by-lapse)
2. Dissolution by request (s. 316)
3. Voluntary dissolution (s. 314–315)
4. Court-ordered dissolution (s. 324–333)

Each method has different legal requirements and consequences. Below is a practical guide to help business owners understand the options—and the risks.

1. Dissolution for Failure to File Annual Reports (Dissolution-by-lapse)

(BCA, ss. 212–214)

Every BC company must file an annual report each year with BC Registries. If a company fails to file for two consecutive years, the Registrar may strike the company from the Register, resulting in dissolution.

Key consequences of strike-off:

• The corporation ceases to exist.
• All assets of the dissolved company escheat to the Province of British Columbia (BCA, s. 214).
• Restoring a struck company requires a court order or administrative restoration, which can be costly and time-consuming.
• CRA may continue to expect tax filings until the corporation is formally dissolved and may impose penalties for non-filing.

2. Dissolution by Request (BCA, s. 316)

If a corporation has no assets and no liabilities, its directors may file a request for dissolution directly with the Registrar using Form 11.

Key features:

• No shareholder special resolution is required.
• The company must truly be empty (no bank account, no receivables, no payables).
• The Registrar has discretion to refuse if there is doubt about unresolved assets/liabilities.

Pros:

• Fast, simple, inexpensive.
• Appropriate for dormant holding companies or legacy corporations that were cleaned out long ago.

Cons:

• Not suitable where assets, liabilities, or tax filings remain.
• CRA may still require final returns, and accountants often prefer a more formal method for audit-proofing.

CRA-related caution:
Dissolution by request provides a minimal paper trail. Where there were assets, liabilities, or recent operations, CRA may question missing documentation or distributions.

3. Voluntary Dissolution (BCA, ss. 314–315)

A corporation with assets, liabilities, retained earnings, tax accounts, or active operations should use voluntary dissolution.

This requires:

1. A special resolution of shareholder(s) approving the dissolution.
2. The director(s) must:
   • Make arrangements for liabilities
   • Finalize tax filings
   • Distribute remaining assets to shareholders
3. Filing the articles of dissolution once the winding-up is complete.

Pros:

• Best practice where money, assets, loans, or tax accounts exist or existed.
• Clean paper trail for CRA, auditors, bankers, and potential future scrutiny.
• Avoids escheat of assets.

Cons:

• Requires corporate formalities and resolutions.
• Slightly more time and cost.

Where a corporation has ever held assets or carried on business, voluntary dissolution is the cleanest and safest approach.

4. Court-Ordered Dissolution (BCA, ss. 324–333)

A liquidator may be appointed by the court, or the court may order dissolution, on application by:

• Shareholders
• Directors
• Creditors
• Or “any other person the court considers appropriate”

The court may order liquidation if:

• A triggering event in the articles has occurred (BCA, s. 324)
• It is just and equitable in the circumstances (BCA, s. 324(1)(b))
• There is deadlock, shareholder oppression, or misconduct
• The company is unable to function

Court-ordered dissolution is a last resort and significantly more expensive.

Final Thoughts

How you dissolve your corporation matters. Failing to plan the dissolution, or choosing the wrong method, can cause tax problems, unintended escheat of assets, or future legal issues if CRA or a creditor challenges the process.

If your company ever held assets, generated income, or has active tax accounts, a voluntary dissolution (with appropriate corporate resolutions and a proper winding-up) is typically the safest and most defensible path.

Ready to Dissolve Your Corporation Properly? We Can Help.

Whether your company is a simple holding corporation or an active business with assets, winding it up the right way can save significant time, tax exposure, and stress down the road. If you’re considering dissolution—or aren’t sure which method fits your situation—reach out. I help business owners throughout Vancouver Island structure clean, compliant dissolutions that help avoid CRA problems and protect the directors and shareholders.

Contact me today at ar@jfblaw.ca or call 250-756-3823 to discuss your corporation, risks, next steps, and the most efficient way to wind things up.

‍