In Canada, there is a choice of 13 provincial and territorial jurisdictions and one federal jurisdiction of incorporation. The federal business law in Canada is the Canada Business Corporations Act (CBCA). When the CBCA was first made law in 1975, it introduced the notion of “incorporation as of right”.
There are several forms of conducting business in Canada: Sole Proprietorship – this is basically a non-incorporated business with a sole owner; Partnership – the Ontario Partnership Act defines a partnership as the relationship between persons who are carrying on business in common with a view to profit. It is not a legally separate entity from its partners. A partnership can be either General or Limited; Corporation – a corporation is a separate legal entity in law from its owners. It can sue and be sued in its own name. Each jurisdiction in Canada (the ten provinces, the territories and Canada) has its own rules for incorporation; Non-profits, Co-ops and Others – These are more specialized forms of business organizations.
One or more competent individuals who are 18 years of age or older and who are not in a status of bankrupt may form a corporation under the Canada Business Corporations Act (CBCA). Similarly, one or more companies or ’bodies corporate’ may incorporate a company. These persons are called incorporators. An incorporator (individual or corporation) may form a corporation whose shareholders, officers and directors are other persons, or may serve as the sole director, officer and shareholder of the company. An incorporator is also responsible for organizational procedures, such as filing the articles of incorporation and designating the first directors. A company can be incorporated under the laws of only one jurisdiction. It must be decided whether to incorporate federally under the CBCA, or under the laws of a province or territory instead of the CBCA. Once the corporation is approved, it must be properly organized. For example, the officers must be elected, the corporate seal adopted, the shares registered, etc. This is done through by-laws, meetings and resolutions. The federal government requires that proper records be kept at the registered office of the corporation, which is to include a copy of the Articles of Incorporation, all by-laws, all amendments, copies of any unanimous shareholder agreements, minutes of meetings, resolutions of directors, a securities register, adequate accounting records, records containing meeting minutes and resolutions, and a register of transfers.
If a corporation’s name does not include the term “société par actions” or “compagnie”, it must comprise the abbreviation “s.a.”, “ltée” or “inc.” at the end to indicate that the corporation is a limited-liability corporation. “Corporation/ Corp and Incorporated / Incorporée are not acceptable terms to be used for legal endings. The most used legal ending by default is INC. A Quebec company’s name must have a French version in addition to any other language (including English). Alternatively, a Quebec company may be assigned a number as its legal name (for example. 123456 Quebec Inc.). This speeds up the incorporating process and permits immediate delivery of the Articles of Incorporation.
Any person may own a share, and this includes individuals, corporations and trusts. Shares are a form of property, and can be bought and sold. However, these rights may be subject to any limitations that may be set out in the Act, the Articles, by-laws, shareholders’ agreements, etc. The crucial matter is the proportion of shares that is initially issued to each shareholder, rather than the actual number. For example, if there are 2 shareholders and each is to have 50% interest in the company, it is irrelevant whether each shareholder receives 10 shares or 10,000 shares each, since in either case, both receive an equal proportion of the shares. In general, there are three types of rights associated with shares; the right to vote, the right to receive dividends and the right to receive the remaining property of the corporation upon dissolution. These rights can be divided among different types or classes of shares. Normally, the Articles of Incorporation will provided that an unlimited number of shares can be issued of each class. Classes can be assigned names (e.g. common, preference, non-voting) or simply be listed (e.g. Class A, Class B, Class C). Every private company must have at least 1 shareholder and there may be several (but not more that 50) shareholders. The complete residential address of each shareholder is needed.
Directors are the individuals who administer the affairs of the company and make all major decisions for the company. Every Quebec private company must have at least 1 director, and there may be several. Only individuals may be directors of a company. There is no residency requirement for directors.
The positions and powers of officers are to be set out in the Articles, by-laws and/ or resolutions of the corporation. A corporation must have a President and a Secretary. It is possible for one person to fill all positions. A shareholder and/or director may also serve as an officer. Usually it is the President who has over all responsibility for the running of the business. The Treasurer is the one who must issue the shares but also usually looks after the accounting. The Secretary is responsible for ensuring that minutes are taken at meetings, and the corporate records and Minute Book are properly kept. Only individuals are may be officers of the company. There is no residency requirement for officers.
A Quebec company must have a registered office within Quebec. The purpose of the registered office is to establish a location where official forms and notices can be delivered to the company. A post office box may not be used as a registered office address.
Newly formed corporation should hold its first meeting of directors (called an organizational meeting)shortly after incorporation. The orders of business of an organizational meeting are usually to appoint officers, issue shares, make by-laws, appoint an auditor until the first meeting of shareholders and make banking arrangements. The first annual meeting of shareholders must be called within 18 months following incorporation. After the first meeting, the directors must call an annual meeting not later than 15 months after its last meeting and not more than 6 months after its financial year end.
TIME NEEDED FOR FORMATION
Usually it is 18 working days.
RECURRING AND MAINTENANCE FEE AS FROM 2ND YEAR
- Provision of registered office and registered address
- Provision of secretary
- Preparation and submission of Annual Returns
- Compliance and Filing Services