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______________________________________________________________________________Stewart McKelveyDoing Business in Atlantic Canadaestablish a claim against the NSULC, and there must be the inability of the NSULC to pay. It is only atthat point that the creditors may pursue shareholders of the NSULC by winding up the NSULC andclaiming a deficiency.Shareholders of an Alberta ULC (“AULC”) are liable for an unlimited amount, on a joint and severalbasis, for any liability, act or default of the AULC, including actions commenced up to two years after thedissolution of the AULC. Liability extends to non-monetary obligations (i.e. criminal liability).Shareholders of a British Columbia ULC (“BCULC”) are jointly and severally liable to satisfy the debtsand liabilities of the BCULC as follows: (a) if the BCULC liquidates, from the commencement of theliquidation to its dissolution, to contribute to the assets of the BCULC for payment of the BCULC’s debtsand liabilities; and (b) whether or not the BCULC liquidates, after dissolution, for payment to the BCULC’screditors of the BCULC’s debts and liabilities.Under the NSCA, “past members” of a NSULC may be liable upon winding-up in certain cases for oneyear after ceasing to be a shareholder. Past members cannot be held liable for obligations contractedafter they ceased to be a member. Under Alberta’s legislation, former shareholders of an AULC are notliable for any liability, act or default of the AULC that arises after the shareholder ceases to be ashareholder and may only be liable for other claims if an action to enforce that claim is brought within twoyears from the date on which the shareholder ceases to be a shareholder. The shareholders of a BCULCwill not be liable for debts of the company unless it appears to the court that the current shareholders areunable to satisfy its debts and liabilities. Even if that is case, the BCULC shareholders will not be liablefor any debts or liabilities that arose after they ceased to be shareholder, and on a liquidation ordissolution they will not be held liable if they ceased to be a shareholder one year or more prior to thecommencement of that liquidation or dissolution.Residency requirements for directors are also different. NSULCs and BCULCs have no residencyrequirements for their directors. Alberta’s legislation requires that at least one quarter of the directors ofan AULC be residents of Canada. U.S. parent corporations may find the lack of a directors’ residencyrequirement for NSULCs and BCULCs to be an advantage, as it eliminates the need to find Canadianresidents to serve as directors. It also avoids the operational inconveniences which result from havingdirectors resident in different locations from that of the parent corporation.Extra-Provincial IncorporationsCorporations which are validly incorporated and existing in one Canadian jurisdiction (including a federalincorporation) may register to carry on business in other Canadian jurisdictions. The process forregistering as an extra-provincial corporation varies from province to province, but is fairly similar. Forillustrative purposes, the process for registering as an extra-provincial corporation in Nova Scotia isdescribed here. It is a relatively simple procedure, under which certain basic information, such as thename of the corporation and the names and addresses of the officers and directors, is required to be filedwith the Registry of Joint Stock Companies. Further, it is necessary for the extra-provincial corporation tohave a recognized agent in the Province of Nova Scotia for the purpose of service of documentationwithin Nova Scotia.Other Business StructuresSole ProprietorshipA sole proprietorship is the simplest form of business enterprise. It consists of an individual who ownsand operates a business. Unlike an incorporated company, in the case of a sole proprietorship theowner/operator personally owns all of the assets, and all obligations of the business are personalobligations of the sole proprietor. As such, the assets of the sole proprietor may be used to settle anyoutstanding debts of the business.A sole proprietor, as a self employed person, is not eligible for and does not pay employment insurance.Sole proprietors must report and pay tax on all proprietorship income in the calendar year in which thePage 13