Incorporation of a Business in Canada

Incorporation of a Business in Canada

In Canada Company is treated as a separate person from its owners and shareholder as in India. In all among G7 countries Canada leads in ease of doing business. Canada is one of the members of the Organization for Economic Co-operation and Development (OECD). In Canada Company can be incorporated at the federal level or provincial level. Most people incorporate their company in the province of Alberta, Ontario, and British Columbia, but in the province of Alberta, Ontario the rule of Canadian citizenship or permanent residency applies.

Forms of business available in Canada:

➲ Co-operative in Canada

➲ Partnership in Canada

➲ Corporation in Canada

➲ Sole proprietorship in Canada

Benefits for registering corporation in Canada

➲ Separate Legal Entity

As per act corporation is a separate legal entity, commonly referred to as a “company”. A corporation has the same rights and obligations as a natural person.

➲ Limited Liability

Incorporation limits the liability of a corporation's shareholders. This means that, as a general rule, the shareholders of a corporation are not responsible for its debts.

➲ Lower Corporate Tax rates:

Corporations are taxed separately from their owners. As the corporate tax rate is generally lower than the individual tax rate, incorporation can offer you some fiscal advantages. 

➲ Easy in raising money

Getting loan and deposits are easier than it is for other forms of business. The ability to issue various types of shares with dividend, redemption, or convertibility choices and to use bonds or debentures greatly enhances the ability of corporations to obtain expansion or development funds.

➲ Continuous existence

The corporation would continue to exist even if every shareholder and director were to die. 

Prerequisite for company incorporation:

The minimum requirement for incorporation:

➲ Minimum 1 director

Director must meet the eligibility requirement for being a director:

A director must:

• Be at least 18 years old
• Not have been declared incapable under the laws of a Canadian province or territory, or by a court in a jurisdiction outside Canada
• Individual (a corporation cannot be a director)
• Not be in bankrupt status.

➲ Minimum 1 Shareholder

➲ Minimum Capital requirement of 1 CDR

➲ Registered local office address

Types of shareholders and their rights:

The article of the company can allow one or more types of shareholders. The rights, restrictions, and conditions for each class must be indicated in the article for each class.

The corporation comprises of only one class of shares, those shares must, as a minimum, have:

• The right to vote
• The right to receive dividends (if any has been declared by the board of director)
• The right to receive the remaining property of the corporation after its dissolution.

The corporation is comprising of more than one class of shares, each of the three rights has to be assigned to at least one class of shares, but one class does not need to have all three. Each right can be given to more than one class.

Other rights:

• Be notified about shareholders' meetings and attend them
• Elect and dismiss directors
• Approve by-laws and by-law changes
• Auditor appointment (or waive the requirement for an auditor)
• Right to examine and copy corporate records, financial statements, and directors' reports
• Right to receive the corporation's financial statements at least 21 days before each annual meeting

The liability of shareholder in a corporation is limited to the amount they paid for their shares; they are usually not liable for the corporation's debts.

Process involve in incorporation of business in Canada

➲ Choose a name for your business

The name should be distinctive and it must not be misleading or likely to be confused with the name used by the other organization or businesses. Corporation of Canada applies very rigorous standards when granting a loan.

➲ Completing the article of incorporation:

The article will establish the structure of your corporation; however, you can apply to change the structure of your corporation once you start operations.

These articles of incorporation will need to be signed by the incorporator(s). In case if an incorporator is a company or other incorporated body, the articles must be signed by an individual authorized by that body

To incorporate, you need to state:

• Proposed corporate name
• Corporation’s province or territory in Canada
• Share subscription detail and any restrictions on share transfers (see The share structure of your corporation)
• Corporation’s number of directors
• Other restrictions you might want to set for your business or business activities
• Any other provisions

➲ Decide to Incorporate federally or provincially

• Federal province

This province provides the platform business under the same name in all provinces and territories, but the expenses will be higher. For incorporating under this province company has to follow the procedure of incorporation through corporations Canada.

• Provincial Incorporation:

Incorporating business under this province incorporation will be done through the provincial registrar.

➲ Establish the initial registered office and the first board of directors

Fix an address where you will be sure to receive any documents that are sent there since, legally, they will be assumed to have been received by the corporation

Documents required and Government Fees

Documents required for company incorporation:

➲ Article of the company

➲ Copies of passport and ID proof of proposed director

➲ Copies of passport and ID proof of proposed shareholder

➲ Incorporation Agreement

Government Fees for incorporating the corporation as per the Canada Business Corporations Act:

• Online $200
• Express Online $300
• Email or mail $250

Corpzo will Offer you:

➲ Name reservation of proposed corporate

Every incorporated business must have a legal identifying name; this is called a corporate name. The first step to integrate is to determine how you wish to name your business.

Your corporation may have a corporate word name (composed of letters and symbols) or a numbered name (for example, Canada Inc. 12345678).

➲ Drafting of the Article for the proposed company

This step sets out the structure.

Try choosing the basic incorporation if you are forming a small, private company. This pre-packaged incorporation option takes the guesswork out of this process and your company will have: pre-determined incorporation things (you can modify them later, if necessary) one class of common shares with a maximum of 10 directors to be assigned.

➲ Drafting of the incorporating Agreement

Any incorporation must carry some agreement incorporating the corporation like shareholder agreement, pre-incorporation agreements, etc.

➲ Establishment of Registered office.

Any incorporated company must have an address for its registered office and a board of directors.

The registered office is where the corporate records will be stored and where official papers on the corporation will be held. Choose an address where you will be sure to receive any documents sent there because it is legally presumed the organization will receive them.

➲ Bank Account opening Facility

We will help you in opening a bank account remotely in Canada where your business has been incorporated.