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How to set up a Corporation in Canada?

Corporation in Canada

Canada has lately turned out to be one of the most attractive destinations for starting business because of its vibrant economy and immigrant friendly policies. Having a corporation in Canada provides the opportunity to exploit the whole of North American market and access to the USA market in particular. Such business opportunities can be tapped by setting up a business in the form of a corporation in Canada. This article lists down the important steps in setting up a corporation in Canada.  

What is Corporation in Canada?  

A corporation is a separate legal entity doing business where it can own assets and incur debts in its own name. They are separate from their owners. A corporation is created when two promoters register their business with the federal or provincial governments by submitting articles of incorporation.  

Procedure of setting up a Corporation in Canada

The procedure of setting up a Corporation in Canada is simple process and can be executed in the following steps.

  • Selecting the JURISDICTIION for incorporation: The promoters can choose to set up their corporation in Canada in any of the 13 provincial and territorial jurisdictions or one federal jurisdiction[1]. Most of the promoters choose their home province/ territory or the federal level as the jurisdiction of their business.  
  • Selecting the NAME of the corporation: The next step in the setting up of a corporation in Canada is to select the name of the corporation. This can be the most tedious part of the incorporation process since each jurisdiction has its own set of guidelines and requirements for corporate name approval.
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Some of the common guidelines followed across the jurisdictions in selecting a corporate name are as follows:

  1. Corporate name must be in consonance with the applicable laws of a particular jurisdiction
  2. Corporate name should not be same or similar to any other existing business name or trademark, if the use of the proposed name is likely to deceive the general public
  3. Corporate name can be either in English or French or both in English and French or in a combined English and French form
  4. Corporate name should have both a distinctive and descriptive element
  5. Corporate name must end with a legal element from amongst the following: Incorporated (Inc.), Limited (Ltd.), Incorporee (Inc.), Limitee (Ltee.)
  • Check the availability of the Corporate Name: Before submitting the proposed corporate name to the government for approval, the promoters must check the availability of the name at the Newly Upgraded Automated Name Search (“NUANS”) system or Centre Informatique du Registre des Enterprises du Quebec (“CIDREQ”) system.
  •  Filing of articles of Incorporation: in most of the jurisdictions, business corporations are formed by filing articles of incorporation with the appropriate government agency. The promoters need to make the following basic decisions regarding incorporation of their corporation in Canada:
  1. Location of the registered office
  2. Number and classes of shares the company will be allowed to issue
  3. Presence of restrictions on share transfer in order to keep the corporation “private”
  4. Number of Directors to be appointed. Maintaining an upper limit and lower limit
  5. Restrictions on the type of activities or business that the corporation will be engaged in
  • Submission and Registration of Articles of Incorporation: The promoters need to submit the Articles of Incorporation and all the supporting documents with the appropriate government agency before corporation in Canada is created. The promoters also need to submit the name search and filing fee along with the documents.
  • Maintenance of Corporate Seal and Minute Book: the law mandates every corporation in Canada to maintain the following documents in a binder or case known as a corporate minute book:
  1. Copy of Articles of Incorporation
  2. Corporate Bye-laws
  3. Minutes of shareholder meetings
  4. Shareholder resolutions
  5. Minutes of director’s meetings
  6. Resolutions of directors
  7. Directors register
  8. Securities register
  9. Share transfer register
  10. Copy of forms filed with the government
  11. Copy of unanimous shareholder agreement
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There is a requirement for a corporate seal for the purpose of embossing the corporation’s name on the legal documents. Apart from few exceptions, all the Canadian jurisdictions mandate every corporation in Canada to maintain corporate seal to verify their validity.

  • Organising the structure of corporation after incorporation: after the incorporation of company in Canada, its structure needs to be organised. Initial organisation of the corporation is achieved by meeting of shareholders or directors or through written resolutions signed by all the shareholders or director. Following things are included in the initial organisation:
  1. approval of corporate bye-laws
  2. Obtaining Issuance of shares to the shareholders
  3. Election of directors
  4. Appointment of corporate officers
  5. Shareholders agreement
  6. Other organisational resolutions
  • Obtaining other permits and licenses: once the promoter has been incoporated, the business needs to obtain other permits and licenses to run the business of the organisation as per the laws of the jurisdiction. The permits can be following:
  1. Obtaining federal business number
  2. Registration for non-corporate business names
  3. Provincial sales tax account
  4. Registration for provincial Employer Health Tax and Workers compensation
  5. Other provincial and municipal licenses
  • Opening of bank account: The Corporation needs a bank account and for obtaining that the promoters need to provide the bank with a copy of Articles of Incorporation of company. Signatures of the all the authorised officers of the company would be required by the bank before they are allowed to sign the cheques or access the corporate account of the business. Banks may also ask for signing of certain bye-laws or resolutions before opening of a bank account.
  • Starting with the operations: having completed all the above mentioned legal requirements in setting up a corporation in Canada, the management can start with the business operations and concentrate on growing of business.  
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On successful execution of the abovementioned steps, a person can set up a business corporation in Canada. Though the process of setting up a corporation is quick, it is a complicated and convoluted task if professional assistance is not taken.              

Read our Article:What are the Advantages of Company Registration in Canada?

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