Advantages of Continuing Corporation when Relocating Business
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Relocating a business to a new provincial jurisdiction is a significant undertaking that involves complex legal, financial, and operational considerations. While the business is physically moving, undertaking a corporte continuance to the new provincial jurisdiction, offers compelling advantages, primarily centered on preserving organizational continuity and minimizing administrative friction.
A major benefit of continuing the corporation into the new provincial jurisdiction lies in the area of financial and tax continuity. By continuing the corporation into the new provincial jurisdiction, the business preserves its established financial track record, which is crucial for retaining credit ratings, securing lines of credit, and managing historical tax attributes. This avoids the disruptive process of transferring tax identification numbers, reorganizing capital accounts, and potentially triggering tax liabilities that might arise from dissolving an entity. Furthermore, the corporation retains its existing accumulated tax losses, if any, which can be carried forward to offset future income in the new province, providing immediate and measurable financial stability and tax planning efficiency for the relocated operations.
Operationally, the continuation model ensures commercial stability and reduces transition risk. The continued corporation remains the named party on all contracts, licenses, permits, and supplier agreements, eliminating the need for costly and time-consuming assignments or renegotiations. If the corporation were to dissolve, every single legal agreement, from leases and employment contracts to client service agreements, would require formal transfer or re-execution, a process that introduces significant uncertainty and potential liability. Maintaining a single, continuous legal persona ensures that banking relationships, intellectual property ownership, and liability protections remain seamlessly in force without interruption, safeguarding the business’s critical operational framework.
In summary, the decision to continue an existing corporation during an inter-provincial move is fundamentally a strategic choice aimed at efficiency and risk mitigation. By continuing the corporation into the new provincial jurisdiction, one is capable of eliminating redundant legal work, accelerating the time-to-market in the new province by ensuring immediate compliance and operational readiness, and providing essential stability to commercial relationships. By prioritizing legal continuity, a business can treat the move as a simple geographical relocation rather than a complex corporate restructuring, allowing management and staff to focus entirely on successfully integrating into the new local economy.
Providing corporate-commercial legal advice and strategic direction to business enterprises engaged as Alberta provincial corporations or federal corporations, from business formation to corporate governance to contracts and business transactions. Contact our law firm at Chris@NeufeldLegal.com or 403-400-4092 to schedule an initial consultation with a corporate relocation lawyer.
