A relatively recent case out of the Provincial Court of Saskatchewan serves as a good reminder as to why all companies must indicate their corporate status in all communications, contracts and other documents. In Vallis v. Prairie Alternative Energy Solutions Ltd., 2013 SKPC 124, Mr. Karras, the sole director, officer and shareholder of the defendant company was found to be personally liable because he did not represent his business as having been incorporated.

In this case, the business was identified as “Prairie Alternative Energy Solutions” in all written materials presented to the plaintiffs. The full corporate name of the company with the “Ltd.” at the end was not present in any written material. There was nothing, therefore, to indicate that Mr. Karras was working in any capacity other than a sole proprietor operating under a business name.

The Business Corporations Act for Saskatchewan, like the Business Corporations Act for British Columbia, requires that a company have the word “Limited”, “Incorporated”, or “Corporation”, or the French translation or abbreviation thereof, be part of and at the end of its name. Further, both acts require a company to use its full corporate name on all contracts, invoices, orders for goods and negotiable instruments. British Columbia further requires full corporate names to be on all business letters and receipts.

Pursuant to the leading case on this matter, as referenced in this case, because incorporation serves as great protection from personal liability for individuals, in order to rely on such protection one must comply with the formalities prescribed in the governing act under which a company is incorporated. Failure to comply with such act by not identifying a company’s full name with “Limited”, “Inc.” or other similar words at the end of its name, which therefore makes it unclear that one is acting on behalf of a corporate entity, could result in personal liability.