This Div is a JS Trigger

Standard

A lawyer acting for a corporation, municipal unit, university, church, society, charitable organization, or other organization (each being an “entity”) should generally1 take reasonable steps to confirm the legal existence of the entity2 and the authority of the person giving instructions3.

A lawyer acting for an entity giving land as security for a loan should also take reasonable steps to ensure that the entity has the power, and is properly authorized4, to borrow money and charge the entity’s land under the constating documents of the entity or by statutory authority5, and that the proper person or persons execute the document(s) effecting the charge6.

A lawyer acting for an entity selling or transferring an interest in land should likewise take reasonable steps to ensure that the entity is properly authorized under the constating documents of the entity or by statutory authority7 to sell or transfer the interest and that the proper person or persons execute the document(s).

A lawyer acting for a client obtaining an interest in land from an entity should take reasonable steps to confirm the legal existence of the entity and to identify the officers and directors currently on any public record.  If the transaction documents are executed by publicly listed officers and/or directors, particularly if they are under seal, the lawyer may assume that the transaction documents have been properly authorized and executed8.


Footnotes

  1. Note the exemptions listed in Regulations made pursuant to the Legal Profession Act, SNS 2004, c 28, s 4.5.6.
  2. See Ibid at s 4.5.5(b) for suggestions for independent source documents.
  3. Ibid, ss 4.5.4 and 4.5.7 and Nova Scotia Barristers’ Society, Code of Professional Conduct, Halifax: NSBS, 2012, ch 3, “Relationship to Clients”, rule 3.2-3, commentary [1].  Note the requirements for non-resident and identification of persons authorized to give instructions set out in the Regulations made pursuant to the Legal Profession Act, SNS 2004, c 28, s 4.5.8.2.  Assuming no changes occur, the lawyer only has to confirm the identity the first time he acts for the entity (ibid, s 4.5.13).
  4. See, for example, the First Schedule to the Companies Act, RSNS 1989, c 81, “Regulations for Management of a Company Limited by Shares”, s 71(b) which requires a special resolution of the Company to allow the Directors to use their power to borrow on the security of a mortgage or debenture.
  5. e.g., Companies Act, RSNS 1989, c 81, s 102 gives all companies incorporated under the Act the power to borrow money and execute mortgages “for the purpose of carrying out the objects of its incorporation” and the Societies Act, RSNS 1989, c 435, s 10(d) allows a society to give a mortgage or a debenture with the sanction of a special resolution.
  6. Nova Scotia Barristers’ Society, Code of Professional Conduct, Halifax: NSBS, 2012, ch 3, “Relationship to Clients”, rules 3.1-1 and 3.1-2, commentary [1].  Note the requirements for proof of execution by corporations in the Land Registration Act, SNS 2001, c 6, ss 83 and 79(1).
  7. See, for example, the First Schedule to the Companies Act, RSNS 1989, c 81, “Regulations for Management of a Company Limited by Shares”, s 147 which vests the management of the Company business in the Directors but which is limited by s 26(9) of the Act which requires a special resolution if the Company is divesting itself of a substantial part of its undertaking.
    Or: Municipal Government Act, SNS 1998, c 18, ss 51-53 and by-laws of the individual municipalities.
  8. See, for example, the Companies Act, RSNS 1989, c 81, s 30 and Canada Business Corporations Act, RSC 1985, c C-44, s 18.

Practice notes

  1. Existence of Entity

The first place to look for the existence of an entity is the Nova Scotia Registry of Joint Stock Companies1.  Companies incorporated and societies created in Nova Scotia and companies incorporated under other legislation but doing business in Nova Scotia should, for the most part, be listed on the Registry.  The records indicate whether the entity is “Active”, “Revoked for Non-Payment”, “Dissolved” or “Struck-Off”.

“Active” means the entity is in good standing and has paid its fees.  Further reference to the specific entity will generally indicate when fees are next payable.

“Revoked for Non-Payment” means that the entity has not paid the annual fee to keep it in good standing.  The entity still exists and can still deal with its assets.  It can get back into good standing simply by paying its fees.

“Dissolved” and “Struck-Off” mean the entity is dissolved2 and no longer exists.  If the entity owned property when it was struck-off, ownership of that property escheated to the Crown3.  It may be possible to revive the entity4 but it is a costly and time-consuming process.

If the records at the Registry of Joint Stock Companies indicate that the name the lawyer is researching is a “Partnership/Business Name”, this means that the name is just that, a name only.  There is a legal entity behind the name which can be found by scrolling down.  For example, ABC Antiques may actually be John Desmond Smith carrying on business as ABC Antiques and the documents should be executed by “John Desmond Smith c.o.b. as ABC Antiques”.  Likewise a corporation might stand behind the name: e.g., 3329573 Nova Scotia Limited uses the name ABC Antiques as its business name.  In that case the numbered company should sign the documents.

  1. Signing Authority

If documents are being provided by in-house counsel for a corporation (e.g., Nova Scotia Power Inc.), unless the lawyer has cause for concern, the lawyer can rely on in-house counsel to provide properly executed documents.  Likewise, if documents are provided by a bank or other major financial institution, the lawyer may assume authority to sign was given.

In the case of an entity without in-house counsel, if the document is not signed by any of the officers or directors listed on the records of the Registry of Joint Stock Companies, the lawyer should ask for a copy of the directors’ resolution giving signing authority for the transaction.  If the directors signing the resolution are not the directors listed at the Registry of Joint Stock Companies, then the lawyer should also request a certificate of incumbency (and an explanation).


Footnotes

  1. Access is available at http://novascotia.ca/sns/access/business/registry-joint-stock-companies.asp
  2. Companies Act, RSNS 1989, c 81, s 136.  See also Societies Act, RSNS 1989, c 435, s 25.
  3. Corporations Miscellaneous Provisions Act, RSNS 1989, c 100, s 27.
  4. Companies Act, RSNS 1989, c 81, s 136.

Amended by Council on November 23, 2018