Dissolving a Partnership or Corporation: Federal vs Ontario vs Alberta

Which law governs your dissolution

What determines which process applies to you

Two questions decide the route: is the entity a partnership or a corporation, and, if a corporation, which statute created it?

Partnerships are never federal. There is no federal partnership statute; a partnership’s existence and dissolution are assessed entirely under the partnership law of the province where it operates, even for partnerships doing business across Canada. That means an Ontario partnership follows the Partnerships Act, RSO 1990, c P.5, and an Alberta partnership follows the Partnership Act, RSA 2000, c P-3.

Corporations follow whichever statute incorporated them, not where they currently do business. The articles of incorporation will name the governing act: the federal Canada Business Corporations Act (CBCA), Ontario’s Business Corporations Act, or Alberta’s Business Corporations Act. A corporation incorporated federally but operating only in Alberta still dissolves under the CBCA, not Alberta’s Act.

Solvency also changes the route in all three systems. A debt-free entity can usually dissolve by a simple resolution. An entity with property or liabilities must settle or provide for those obligations first: federally, a special resolution must authorize directors to distribute property and discharge liabilities before articles of dissolution are filed (CBCA s 210(3)); in Ontario, the corporation must satisfy the Act’s requirements on creditors and distributing remaining property before dissolving; in Alberta, shareholders and directors must appoint a liquidator to deal with assets and settle debts if the corporation still has liabilities.

Dissolving a partnership (Ontario and Alberta)

Both provinces recognize similar dissolution triggers, though the exact provisions differ:

1. Notice. Any partner can end a partnership formed for an undefined term by giving notice; dissolution takes effect on the date named in the notice or, if none is stated, from the date the notice is communicated (Ontario s 32(c); Alberta s 36(2)).
2. Charge on a partner’s share for personal debt. The other partners may elect to dissolve the partnership if one partner’s share of partnership property is charged for that partner’s separate debt (Ontario s 33(2); Alberta s 37(2)).
3. Illegality. The partnership is automatically dissolved if a later event makes the business, or the partners carrying it on together, unlawful (Ontario s 34; Alberta s 38).
4. Court order. A partner can apply to court on several statutory grounds, including the general “just and equitable” ground (Ontario s 35(f); Alberta s 39(1)(f)).

Ontario’s Act adds an automatic trigger not confirmed in this pack’s Alberta sources: a partnership dissolves as against all partners on the death or insolvency of any partner, unless the partners have agreed otherwise (s 33(1)). Alberta partners relying on this point should check the current Partnership Act and their partnership agreement directly.

After dissolution, a partner’s authority to bind the firm continues in both provinces, but only so far as necessary to wind up the partnership’s affairs (Ontario s 38; Alberta s 42). Alberta partners can additionally protect themselves from future liability by filing a declaration of dissolution and publishing it at least twice in the Alberta Gazette, which serves as notice to anyone who had no prior dealings with the firm (s 40(2)). For Alberta limited partnerships, creditors other than limited partners recovering contributions and general partners must be paid first when accounts are settled on dissolution (s 73).

If the partnership operated under a registered business name, Ontario also requires cancelling that Business Name Registration once the business stops (no filing fee); replacing all the partners in an existing registration is treated as a new registration rather than an amendment.

Dissolving a corporation (federal, Ontario, Alberta)

Federal (CBCA): the route depends on the corporation’s state. A corporation that has never issued shares can dissolve by resolution of all directors. One with no property and no liabilities can dissolve by special shareholder resolution. One with property or liabilities can dissolve by special resolution authorizing directors to distribute the property and discharge liabilities before filing (s 210). Alternatively, directors or a voting shareholder can propose voluntary liquidation and dissolution; once a Certificate of Intent to Dissolve issues, the corporation must stop carrying on business except to liquidate, though it still legally exists until final dissolution (s 211). Neither certificate carries a filing fee. A corporation that is bankrupt, or has a trustee under a proposal or an interim receiver under the Bankruptcy and Insolvency Act, cannot voluntarily dissolve (s 211(9)).

Ontario (Business Corporations Act): dissolution requires a special resolution or unanimous written shareholder consent, filed as Form 10 Articles of Dissolution and signed by a director or officer (an executor, lawyer, or accountant cannot sign it) (s 237(a)-(b), s 273). The filing fee is $25 online through the Ontario Business Registry. A shell corporation that has never issued shares or started business can use the simpler Form 11 if all incorporators authorize it (s 237(c)). Before dissolving, the corporation must satisfy the Act’s requirements on creditors and distributing remaining property. Any real property the corporation holds becomes Crown property in Ontario on dissolution.

Alberta (Business Corporations Act): Part 17 sets out four routes: dissolution by directors or shareholders in special cases, voluntary liquidation and dissolution, dissolution by the Registrar, and dissolution by court order (ss 211-214). In practice, shareholders and directors vote to dissolve if the corporation has stopped business and has no debts; if debts remain, they must first appoint a liquidator. Filing goes through an authorized Corporate Registry service provider, which charges a government fee (currently $0 to file intent to dissolve) plus a market-set service fee with no government-imposed cap.

Involuntary and court-ordered dissolution exists in all three systems as a backstop. Federally, the Director may dissolve a corporation after 120 days’ notice for not commencing business within three years, not carrying on business for three consecutive years, one year’s default in required filings, or having no directors (s 212); the Director or an interested person can also apply to court (s 213), and a shareholder can seek court-ordered dissolution where the corporation’s conduct is oppressive or unfairly prejudicial (s 214). Ontario’s Director can cancel a corporation for reasons set out in ss 240-241, such as failing to file required returns. Alberta’s Registrar has parallel authority to dissolve by certificate under s 213.

Revival is available everywhere. Federally, an interested person can apply to the Director to revive a dissolved corporation, restoring it to its previous legal position, including rights that arose before or during the dissolution (s 209). Ontario allows revival within 20 years of the dissolution date, after which the corporation is deemed for all purposes to have never been dissolved (s 241(4),(9)). Alberta allows revival within 10 years of dissolution, and property that passed to the Province can be claimed back within the period set by the Unclaimed Personal Property and Vested Property Act.

After dissolution: closing federal tax accounts

Once any corporation is dissolved, regardless of which statute created it, the CRA recommends sending a copy of the articles of dissolution to the CRA and using Form RC145, Request to Close Business Number Program Accounts, to close GST/HST, payroll, and corporate income tax accounts. Federally incorporated corporations must also keep their corporate records for six years after the dissolution date (Canada Business Corporations Regulations, 2001, s 14.1).