Corporate Registration Fraud
Can fraud happen at Alberta Corporate Registry? Yes it can.
We have seen the following when a shareholder or director goes to a registry office without the consent or knowledge of the other shareholders or directors:
· Remove themselves as a shareholder or director (usually done when the corporation is in financial trouble)
· Remove one of the other shareholders or directors
· Add a new shareholder or director
While we do not operate a registry office, we understand that a registry office will process requested changes when the request is made in person and an individual who provides identification matches the name of one existing shareholder or director. This allows one person to make changes without the knowledge or consent of the others. When this is done in a deceitful manner, it can be fraudulent.
The most common scenario is the resignation of a director when the corporation is facing financial difficulties. Directors are personally liable for a number of items. The most common are personal liability for unpaid GST or unpaid employee withholdings such as income tax, CPP, and EI. Once the corporation is left with only one director, that remaining director cannot resign. Corporate Registry will not permit a corporation to have zero directors. If you are the last director (without your consent or knowledge) you could be in a precarious position.
One method to provide some protection is to use Galbraith Law as the registered office for your corporation. As part of our annual return service, we check to see if any changes have been made at Corporate Registry in the past 12 months without our participation and bring that to the attention of the directors and shareholders and can correct the change if it was done without the proper knowledge, consent and corporate resolutions in place. In many cases, we have been able to reverse the unauthorized changes before any further damage is done.
If your corporation is already using our registered office services, then you can rest assured that we will perform this check on an annual basis. If you are not using Galbraith Law as your registered office, please enquire as to the many services we offer as registered office.