The idea of a corporation in Canada is comparable to that of a company in other countries in that the investors’ liability for the corporation’s debts and obligations is constrained, the investor can raise capital from investors quite easily, and the tax payment can be optimized in a variety of ways. However, a company requires extensive documentation and significant financial outlays for its governance, formation, etc.
Categories of corporations
The 5 recognized corporate entities in Canada are as follows:
- Canadian Controlled Private Corporation (CCPC)
- Other Private Corporation
- Public Corporation
- Corporation Controlled by Public Corporation
- Other Corporation
How to register a company in Canada
A potential applicant must adhere to the following steps to register a business in Canada:
Choose a suitable jurisdiction
The business owner must first choose the jurisdiction in which he or she wishes to create the company before registering it. The jurisdiction determines the boundaries of the company’s permitted business activity. The entrepreneur has the option of incorporating the business in one of 13 provincial or federal jurisdictions. Entrepreneurs often choose their home province or the registration at the federal level as the jurisdiction for their business.
Choose the corporation’s name
The following stage is for the business owner to choose the name of the company. This is a little challenging since the rules and specifications for approving company names vary across jurisdictions. The following are some of the rules that apply to name choosing in all jurisdictions:
- The name shouldn’t go against the established legislation of the country.
- The name shouldn’t be the same as or similar to a trademark or business name that already exists.
- The name shouldn’t be used in a way that misleads the public.
- The name may be written in either English, French, both English and French, or a combination of English and French.
- The name should have a unique and descriptive component.
- The name should always be followed by a suffix that describes the company’s legal structure.
Determining if the name of the corporation is available
The availability of the selected name must be confirmed before submitting the corporate name for the company. The Newly Upgraded Automated Name Search (NUANS) system or the system of the Centre Informatique du Registre des Entreprises du Quebec (CIDREQ) may be used to verify the name availability.
Creating the incorporation documents
A simple pre-packaged incorporation plan may be created when an entrepreneur is considering incorporating a small or private firm. This plan comprises the following:
- Model Articles of Incorporation have already been written (which can be amended later on)
- Maximum of 10 directors and two or three classes of shares
- A designated and numbered corporate name
However, if the business owner is considering forming a larger organization, a tailored incorporation plan is available and includes the following:
- Firm name
- Company’s share structure and restrictions on the transfer of shares
- Number of directors in the organization
- Restrictions that the business owner seeks to put on the corporation
Document submission and registration for incorporation
The next stage is for the business owner to submit the required paperwork to the relevant government agency before forming a company in Canada. This paperwork includes the Articles of Incorporation as well as supporting materials including a name search report and a filing fee.
Creation of the corporation’s board of directors
Additionally, the founder must create the corporation’s board of directors (BOD). The eligibility requirements for serving as a director of the company must be met when the BOD is being formed. Each director’s first and surname names, as well as their separate addresses, must be stated when incorporating. When they incorporate, the residence status must also be stated.
Issue of shares, completion of organizational minutes, and adoption of bylaws
Once the business has been incorporated, it is crucial to organize its organizational structure. A meeting of shareholders and directors may be called, or written resolutions may be adopted and signed by the directors or shareholders. The basic structure of the business is made up of the following:
- Getting the corporation by-laws approved
- Distributing shares to stockholders
- Choice of the directors
- Appointing the corporation’s officers
- Ownership agreement
- Additional organizational decisions
Additional permits and licenses to be arranged
After being incorporated, a company has additional legal tasks to fulfill. These requirements include acquiring extra licenses and permissions, such as the ones listed below:
- Getting a federal business number registered
- Getting registered for worker’s compensation and the provincial employer health tax
- Opening an account for the provincial sales tax
- Creating a non-corporate company name registration
- Additional municipal and provincial licenses
Opening a corporate bank account
A corporate bank account must be opened by every company. A copy of the prospective corporation’s articles of incorporation must be sent to the bank by the applicant. All of the company’s authorized officials must provide their signatures. A copy of the corporation’s by-laws or resolution may also be required by the bank in some circumstances before they are allowed access to the bank account.
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