Canadian corporate statutes require every corporation to appoint an auditor unless its shareholders agree not to. Almost every private corporation does agree, and has its accountant prepare a compilation or review engagement instead, which costs far less than an audit.
The waiver isn’t permanent. It lasts one year, or until the next annual meeting, so it belongs in every year’s annual resolutions. In most provinces every shareholder must sign, including holders of non-voting shares, which is easy to miss when family members hold non-voting shares.
US corporations don’t need this resolution: neither Delaware nor the Model Business Corporation Act requires a private corporation to be audited.
- Approved by
- The shareholders
- Signed by
- Every shareholder, voting or not, except in Alberta (a special resolution)
- How long it lasts
- One financial year, or until the next annual meeting
- Filed with the government
- No
- Not available to
- Public companies (distributing, offering or reporting issuers)
When you need one
- Every year, with the annual resolutions of the shareholders, for as long as the corporation doesn’t want an audit.
- In the first year, at the first annual meeting or the written resolutions that replace it.
- When you issue shares to a new shareholder, including non-voting shares to a family member or trust: they must sign the next waiver too, except in Alberta.
Who approves it
The decision belongs to the shareholders, not the directors, and only private corporations qualify. There is no revenue or asset limit. For a corporation with one shareholder, that shareholder’s signature is “all the shareholders”.
| Jurisdiction | Rule |
|---|---|
| Canada, federal (CBCA) | Shareholders of a corporation that isn’t a distributing corporation may resolve not to appoint an auditor. It is valid only if every shareholder consents, including those not otherwise entitled to vote, and only until the next annual meeting (s. 163). |
| Ontario (OBCA) | A corporation that isn’t an offering corporation is exempt for a financial year if all the shareholders consent in writing to the exemption for that year (s. 148). |
| British Columbia (BCBCA) | All the shareholders, whether or not their shares carry the right to vote, waive the appointment by unanimous resolution. The waiver can be given before or after the auditor would be due and is effective for one financial year only (s. 203). |
| Alberta (ABCA) | Since 2021, a corporation that isn’t a reporting issuer can waive the auditor by special resolution: two-thirds of the votes cast at a meeting, or signed by all the voting shareholders (or by holders of two-thirds of the voting shares in writing, s. 141(2.1)). It is valid until the next annual meeting (s. 163). |
| Quebec (QBCA) | A corporation that isn’t a reporting issuer can decide not to appoint an auditor by unanimous resolution of the shareholders, including those not otherwise entitled to vote. It lasts until the next annual meeting and ends the term of any auditor in office (s. 239). |
| Delaware (DGCL) and Model Act states (MBCA) | No audit requirement for a private corporation. Audits are usually required by a lender, an investor or a licensing body instead. |
Before you sign
- Check your shareholder register. List every shareholder of every class, including non-voting shares and shares held in trust; each must sign, except in Alberta.
- Check your agreements. A lender, franchisor, licensing body or shareholder agreement may require audited statements even when the statute doesn’t.
- If an auditor is in office, it may submit a statement opposing the resolution, and under the federal statute that rules out passing the annual business in writing. Talk to the auditor first.
- Agree what your accountant will prepare instead, usually a compilation or a review engagement.
Sample wording
Adapt the wording to your corporation: replace everything in square brackets, and check your articles, bylaws and any shareholder agreement first. Each person signs and dates a copy, and a scanned or electronic signature is usually fine.
Resolutions of the shareholders of [Corporation name] (the “Corporation”)
BE IT RESOLVED THAT the Corporation, not being a [distributing corporation / offering corporation / public company / reporting issuer], not appoint an auditor for the financial year ending [date], and that the shareholders consent to the Corporation being exempt from the requirement to appoint an auditor for that year.
The foregoing resolution is signed by all the shareholders of the Corporation, whether or not their shares otherwise carry the right to vote, as of [date].
______________________________
[Name], shareholder
______________________________
[Name], shareholder
In Alberta, the waiver is a special resolution of the voting shareholders, so non-voting shareholders don’t need to sign.
After you sign
- Tell your accountant the audit is waived, and confirm what they will prepare instead.
- If an auditor was in office, tell them in writing. In Quebec, the resolution ends their term automatically.
- Put the waiver for next year in your calendar with the other annual resolutions.
What to keep in your minute book
- The signed resolution for each year, with the annual resolutions or minutes.
- The shareholder register as of the date of the resolution, showing that everyone who had to sign did.
Common questions
Do I need to sign an audit waiver every year?
Yes. The federal, Alberta and Quebec statutes make it last until the next annual meeting, and Ontario and British Columbia make it last one financial year. Most corporations include it in their annual shareholders’ resolutions.
Do non-voting shareholders have to sign?
Under the federal, Ontario, British Columbia and Quebec statutes, yes: the consent must come from all the shareholders, whether or not their shares carry a vote. Alberta changed its rule in 2021, and now a special resolution of the voting shareholders is enough.
What if one shareholder refuses to sign?
Then, outside Alberta, the corporation must appoint an auditor for that year. A shareholder who wants audited statements is entitled to insist on them.
Does waiving the audit mean we don’t need financial statements?
No. The directors must still prepare, approve and present annual financial statements, and the corporation still files them with its tax return. British Columbia is an exception: its shareholders can also waive the statements for a year by unanimous resolution.
Do US corporations need an audit exemption?
No. Delaware and the Model Business Corporation Act don’t require a private corporation to be audited, so there is nothing to waive. An audit is usually a contractual requirement, from a lender or investor.
This page is general information about corporate resolutions in the United States and Canada, not legal or tax advice. The sample wording is a starting point: your articles, bylaws and any shareholder agreement may require something different, and rules change over time. For advice about your corporation, speak with a qualified lawyer or accountant.
Sources
- Canada Business Corporations Act, sections 162 and 163
- Ontario Business Corporations Act, section 148
- British Columbia Business Corporations Act, section 203
- Alberta Business Corporations Act, sections 1(ii), 141 and 163
- Quebec Business Corporations Act, section 239
- Corporations Canada: corporate records and other obligations