External Companies

Task: Research the limitations imposed on external companies doing business while not registered in Guyana. External Company Defined Section 249 (2) of the Companies Act 1991 states: An external company is a firm or other body of persons, whether incorporated or unincorporated, that is formed under the laws of a country other than Guyana. Manitoba-Corporations Act C.C.M. C225; Section 1(1) states: extra provisional body corporate" means a body corporate that is incorporated otherwise than by or under the authority of an Act of the Legislature or of the Parliament of Canada; Carrying on an undertaking Section 310 (1) (b) defines an undertaking as any business or undertaking carried on by the external company. Section 310 (2) further provides: An external company shall be carrying on an undertaking in Guyana ifa) Business of the company is regularly transacted from the an office in Guyana established or used for the purpose b) The company establishes or uses a share transferor share registration office in Guyana; c) The company enters into two or more contracts with persons resident in Guyana, or with companies incorporated under this Act, being contracts which(i) are entered into in connection with the business of the company; and (ii) by their own express or implied terms are to be wholly or substantially performed in Guyana, or may be so performed at the option of any party to the contract; d) the company appoints an agent who resides or has a place of business in Guyana to represent the company in connection with the making or performance of two or more contracts of a kind referred to in paragraph (c), or in connection with the transactions in Guyana of the company generally, whether the appointment is made for a fixed period of time or not; or e) the company owns, possesses or uses assets situated in Guyana for the purpose of carrying on or pursuing its business if it obtains or seeks to obtain from those assets, directly or indirectly, profit or gain, whether realized in Guyana or not. Prohibition Section 311 states:

No external company shall begin or carry on any undertaking in Guyana until it is registered under this Act. Previous Activities by the external company Section 326 of the Companies Act 1991 provides: Registration or revival of registration under this Act of an external company shall retroactively authorise all previous acts of the company as though the company had been registered at the time of those acts, except for the purposes of a prosecution for any offence under this Division. It is submitted that according to the act registration of the external company has retroactive effect that is it authorises all the previous acts of the company as if it had been registered at the time those acts were executed. Limitation of an unregistered external company The external company that is not registered cannot maintain any action, suit or other proceeding in any court in Guyana in respect of any contract made in Guyana. Section 330(1) of the Companies Act 1991 provides: An external company that is not registered under this Act may not maintain any action, suit or other proceeding in any court in Guyana in respect of any contract made in whole or in part within Guyana in the course of or in connection with the carrying on of any undertaking by the company. Section 330(2) further provides: Notwithstanding subsection (1), when an external company described in that subsection becomes registered under this Act or has its registration restored, as the case may be, the company may then maintain an action, suit or other proceedings in respect of the contract described in subsection (1) as though the company had never been disable d under that subsection, whether or not the contract was made or proceeding instituted by the company before the date the company was registered or had its registration restored. British Columbia - Company Act R.S.B.C. 1996, c. 62, section 312 provides: 312. (1) An extra-provincial company that is not registered as required by this Act is not capable of (a) maintaining an action, suit or other proceeding in any court in British Columbia in respect of any contract made in whole or in part in British Columbia in the course of or in connection with its business, Manitoba-Corporations Act C.C.M. C225 Actions

197(1) An extra provincial body corporate is not capable of commencing or maintaining any action or other proceeding in a court in respect of a contract made in whole or in part in the province, in the course of, or in connection with, the business or undertaking carried on by it, without being registered under the provisions of this Part. Registration authorizes all previous acts 197(3) The registration of a body corporate is deemed to authorize all previous acts of the body corporate, and is construed as if the certificate of registration or supplementary certificate of registration had been granted before the body corporate commenced to carry on its business or undertaking in the province, except for the purpose of a prosecution for an offence under this Part. Carrying on undertaking while unregistered British Columbia- Business Corporation Act S.B.C 2002 Chapter 57 replaced Company Act 1999 S.B.C c. 27 Part 11 section 378 (4) provides; No act of a Foreign entity that carries on business in British Columbia, including a transfer of the property rights or interests to it or by it, is invalid merely because: (b) the foreign entity was not at the time of that act, registered as an extraprovincial company. Case-law In C & C International Yachts Limited v Pacific Quest Yachts Inc.1: Facts The plaintiff did business in British Columbia including the entering into the contracts upon which the plaintiff now sues the defendant, it not only was not registered as an extra provincial company but never had been registered when it commenced the proceedings at bar suing the defendant. It has however become registered as an extraprovincial company after the commencement of its proceedings. The defendant sought to leave to amend his Statement of Defence by adding in pleadings that the plaintiff entered into contracts which are by virtue of the plaintiff company never having been registered, in the view of the defendant, illegal and unenforceable.

Arguments raised by the defence Counsel for the defence urged that the Companies Act R.S.B.C. 1979 section 337 contained an implied prohibition preventing unregistered companies that have never before been registered from engaging in business in the Province of British Columbia

(1994) 98 B.C.L.R. (2 d) 171

Judgment of the Owen-Flood, J The learned judge stated that he found no such provision express or implied, in the Companies Act. The Companies Act R.S.B.C 1979 section 337 1(a) and (b) states what the unregistered company is incapable of namely: a) Maintaining an action suit or other proceeding in any court in the province in respect of any contract made in whole or part in the province in the course of or in the connection with its business. b) Acquiring or holding land or an interest in it in the province or registering any title to it under the Land Title Act. Issue: Doing business other than that in this province while unregistered. The learned judge followed the law as enunciated by MacDonald J. in Northwest Trading Co. Ltd. v Northwest Trading Co. Ltd, (1920) 1 W.W.R. 353 B.S.C., 353 at p. 360 where he held: the plaintiff company was entitled to enter into contracts in this province prior to being registered as an extraprovincial company. If they saw fit thus to do business, the only impediments would be the imposition of a fine, which might be relieved against later on after registration and that its contracts could not be enforced until registration had been obtained. So the plaintiff is not evoking the aid of the court to sanction and perpetuate business of an illegal nature. Decision Court declined to grant the amendments sought

In Smith v. Western Can. Flour Mills Co2., Harvey C.J.A. considered the following, provision of section 10 , it states: Any foreign company required by this Ordinance [the Foreign Companies Ordinance, 1903 (N.W.T.)] to become registered shall not, while unregistered, be capable of maintaining any action or other proceeding in any Court in respect of any contract made in whole or in part in the Territories in the course of or in connection with business carried on without registration contrary to the provisions of section 3 hereof. He concluded [pp. 532-33]: Some meaning must be given to the words while unregistered, used in sec. 10, and some intention ascribed to the legislature in their use. If the plaintiffs contention is to prevail, they must be deemed to be absolutely meaningless. It was suggested that they might have reference to a period not before registration, but after registration which might have become annulled. To give such a meaning would be limiting them
2

(1911) 17 W.L.R 531 (C.A)

to something less than their natural meaning, without any warrant or anything in the Ordinance to suggest such limitation. When words can be construed in their natural meaning, a restricted meaning will certainly not be given them for the purpose of taking away natural rights, though in some circumstances it might, in order to prevent such a result. The company are prohibited from doing business without registration, and are made subject to a penalty for disobedience. The company are also by sec. 10 declared incapable of maintaining an action. Their contracts, however, are not void, but only unenforceable in the Provincial Courts, while the company remains unregistered but, upon their becoming registered, their contracts are not only valid but enforceable. This is the conclusion from the only interpretation of sec. 10 which appears to me to be consistent with reason and common sense. In Smith v Draper Dobie and Company3, Draper Dobie at all times material carried on business in Alberta without complying with the registration set out in section 166 of the Companies Act, while unregistered this company entered into a contract with the defendants. The defendant argues by counter claim that an extra provincial company has not inherent capacity to contract within Alberta until registered. Relevant provisions of Pt. 8 of the Companies Act R.S.A 1970 c.60 (This section has been repealed by the Companies Act R.S.A 200 C-21) Section 166 (1) Every extra-provincial company that carries on business in the Province shall be registered under this Part within 30 days after commencing to carry on business in the Province, and shall, except as hereinafter provided, comply with the requirements of this Part. Section 179 (1) Any extra-provincial company required by this Part to become registered, other than a Dominion company is not while unregistered capable of commencing or maintaining any action or other proceeding in any court in respect of any contract made in whole or in part in the Province in the course of or in connection with business carried on without registration contrary to the provisions of section 166 Moshansky J, in considering section 179 stated at para. 25; Section 179 does not say that an extraprovincial company is forever precluded from bringing an action on a contract made while it was unregistered. Rather the section states that a company is precluded only while unregistered. On the face of it the company can register and thereafter commence action. It is respectfully submitted, based on the provisions of the Company Act 1991 and the authorities sited, an external company that is not registered is prohibited from maintaining an action, suit or other proceeding in any court in Guyana in respect of any contract made in whole or in part within Guyana in the course of or in connection with the carrying on of
3

14 A.R. 567 8 Alta. L.R. (2d) 84

any undertaking by the company in Guyana. Nothwithstanding this provision the company can subsequently become registered and thereby may maintain an action or suit or other proceeding in respect to a contract made in whole or in part in Guyana as though the company was never disabled under section 330 sub. 1. Therefore where an action had been dismissed or otherwise decided against the external company on the ground that it was prohibited by reason of companys not being registered under the Act, when the company becomes registered it can maintain a new action. As provided for in section 331. It states: Where an action, suit, or proceeding has been dismissed or otherwise decided against an external company on the ground that an act or transaction was invalid or prohibited by reason of the companys not being registered under this Act, the company upon such terms as to costs as the court may order, maintain a new action, suit or other proceeding as if no judgment had been given or entered therein. Registration of Charges4 Charges External Company Section 249(1) states: This Division shall apply to charges created or acquired, after the commencement of this Act, by an external company, on property in Guyana, in like manner and with all the consequences as if the company were a company defined in subsection (2), whether or not the external company is registered under this Ac pursuant to Division A of Part IV. Penalties New Zealand- Companies Act 1955 Pat XII Overseas Company Section 406 provides: Penalties - If any overseas company to which this section applies fails to comply with any of the foregoing provisions of this Part of this Act, the company, and every officer or agent of the company who knowingly and willfully authorises or permits the default, shall be liable to a fine not exceeding fifty pounds, and, in the case of a continuing offence, to a further fine not exceeding five pounds for every day during which the default continues. Section 313 (1) of our Companies Act provide: an external company, upon the payment of the prescribed fee, shall be entitled to be registered under this Act for any lawful undertaking. Manitoba-Corporations Act C.C.M. C225 Penalty 187(5) Every body corporate that carries on its business or undertaking in the province without being registered, and every director and officer of the body corporate,
4

Part III Division A, Section 233 section 248 Companies Act 1991

and every representative or agent acting in any capacity for the body corporate so carrying on its business or undertaking, is respectively guilty of an offence and is liable to a penalty of $50. for every day the business or undertaking is so carried on. Orders the Court can make Stay of Proceedings In John Mc Afee Law Corporation v Willey et al. 2001 BCSC 1818, the court on being satisfied that the company 77713 Resources Inc. was carrying on business in British Columbia while unregistered order a stay of proceedings, pending registration of 77713 Resources Inc. in British Columbia as an extra-provincial company.