Local Government Subsidiaries

Municipalities can incorporate by using their natural person powers under section 8(1) of the Community Charter (the “Charter”). Regional Districts, while lacking natural person power, are authorized by section 263(1)(f) of the Local Government Act (the “LGA”) to “engage in commercial, industrial and business undertakings and incorporate a corporation or acquire shares in a corporation for that purpose”. While incorporating a company has many practical benefits for a local government, there are several factors it must consider and requirements it must adhere to both during the incorporation process and once the corporation is up and running. In this paper, we’ll discuss the advantages of incorporating or acquiring a corporation, review the incorporation process, including those steps unique to local governments, and, finally, consider the issues that local governments may face during the creation and use of subsidiaries.

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