How to Incorporate a Company
The steps you need to take to incorporate a company in Canada...
To incorporate a company, the following documents must be prepared:
- Incorporation Agreement
- Incorporation Application/Notice of Articles
Only the Articles and the Incorporation Application/Notice of Articles must be filed with the Corporate Registry.
The regulation under the Business Corporations Act requires that incorporation application documents must be filed online. Go to the website Corporations Canada to file documents
Reserving a company name
The first step to incorporate a company is to obtain approval of the proposed name from the Names Unit of the Corporate Registry, for which a reservation fee is charged. Once approved, the name is reserved for a period of 56 calendar days after which a renewal request and additional fee is required.
There are detailed criteria that determine whether a name will be approved, the most important of which is that the name must not be similar to the name of an existing company, to avoid confusing or misleading the public.
Requirements for shareholders and directors
The shareholders are the owners of the company. The directors have the responsibility and control of the company. They may appoint officers, such as a president or secretary. Typically, the officers handle the day-to-day operations of the company and are overseen by the directors.
A shareholder does not need to be a Canadian citizen or Canadian resident.
Incorporated companies must have one or more directors. A director does not need to be a Canadian citizen or Canadian resident.
A director must sign a consent to act as a director, and provide an address where they can receive documents during normal business hours or their home address.
A director must be over 18 years old, not mentally incompetent, not an undischarged bankrupt, and must not have certain criminal convictions.
Once it is decided who is going to be involved in the company as shareholders and directors, it is possible to start preparing the incorporation documents.
Making an incorporation agreement
Prior to applying to the Registry for incorporation, the person or persons wishing to form the company must complete an Incorporation Agreement. It specifies the name(s) of the people who will be the shareholders (referred to as "incorporators"), and sets out the number, kind and class of shares that each of the incorporators agrees to take once the company is incorporated. The incorporators must each sign the Incorporation Agreement.
The Incorporation Agreement is not submitted to the Corporate Registry, but it does form part of the corporate records of the company. A signed original should be placed in the company's corporate records book, and must be kept at the company's records office.
Choosing articles of incorporation
The articles set out the rules by which the company, its directors and shareholders conduct the formal business of the company.
The standard "Table 1 Articles" set in the Business Corporations regulation can be used. The incorporator(s) must sign the Articles of the company. The Table 1 Articles are suitable for most small companies and are normally adopted without changes, though they are not mandatory and may be customised. This usually requires the help of a lawyer.
Completing the Incorporation Application/Notice of Articles
The Incorporation Application/Notice of Articles (a two part document) must be filed with the Corporate Registry. It cannot be filed in hard copy, only online using Corporation Canada along with the prescribed fee.
The necessary form - Form 1 Incorporation Application/Notice of Articles - can be downloaded from Corporation Canada and a paper version printed out for completing prior to transposing the information to the online filing form.
The "Notice of Articles" part of the form contains the following information:
- Company's name
- Authorised share structure
- Special rights and restrictions attached to the shares, if any
- Registered and records office addresses
- The names, and business or home addresses of the directors
The company must have both a registered office and a records office. They must be in the province, and it is usually more convenient to have them at one address. The records office is the address where the company keeps all the formal documents required in order to comply with the Business Corporations Act. The registered office is where legal documents can be delivered, either by mail or by formal service, and must be a street address that is open to the public during normal business hours.
Once the incorporation documents have been completed and submitted to Corporate Online the company is incorporated immediately. Alternatively, an incorporation date and time up to ten days in the future can be specified for an additional fee. An incorporation number will be assigned, and a password for the company must be chosen. This password will be needed to file further corporate forms with the Corporate Registry in the future using Corporate Online.
Following the company's online incorporation, a Certificate of Incorporation and certified true copies of the Incorporation Application/Notice of Articles will be issued by the Corporate Registry and forwarded to the company for inclusion in the company's corporate records book.
Maintaining the company's status
Once a company has been incorporated its official records book must be created, inserting the incorporation documents, and preparing certain post-incorporation documents including director and shareholder resolutions, share certificates, a directors' register and a share register. The assistance of a lawyer is recommended to do this.
The company is responsible for filing certain other documents with the Corporate Registry in order to maintain its active status, including an annual report within two months of the anniversary date of incorporation.
Examples of other circumstances in which forms may have to be filed with the Corporate Registry from time to time are if there are changes in the registered office, in the names of the directors or in the directors' addresses. There are fees associated with most of these filings.
In some cases, paper forms may be completed and a law firm or registry agent will submit the forms for a fee.