Steps for New Company Formation in Canada
A. Jurisdiction of Incorporation – Federal Vs. Provincial Company Incorporation
A Federally formed Corporation has advantage of its name protection throughout the Canada whereas in case of a provincially incorporated company, its name is protected within the province of the incorporation only.
Under the Federal Corporation, the Company incorporation is done under the Canada Business Corporation Act and the “Certificate of Incorporation” on the new company formation is issued under the ‘Canada Business Corporation Act’ and whereas in case of the provincial incorporation the company incorporation is generally done under the provincial ‘Business Corporation Act’ i.e. in case of Company incorporated under the Ontario Business Corporation Act, the Certificate of Incorporation on the incorporation is issued under the Ontario’s “Business Corporation Act”. The legal validity of the corporation is same under both the laws except few minor compliances or procedural variations.
B. Province of Business
Whether it is a Federal Incorporation or a Provincial Incorporation, there are no restrictions in doing the business in any province. The only requirement is to get itself registered with the province in which the corporation carries out its business. So wherever the corporation has a place of business, it has to obtain the registration of that particular province irrespective of the jurisdiction of incorporation.
C. Named Vs. Numbered Company
Canada offers to form a ‘named company’ or the ‘numbered company’. A numbered company is a company which can be formed without much complication (with respect to name approval) as long as the required documents and information is in place. In the case of numbered company, a number is assigned to the corporation on the submission of application for incorporation and that number becomes the legal identity of the company. Generally the number assigned is followed by words like Canada Inc. or Ontario Inc. as the case may be of Federal Incorporation or Provincial Incorporation.
However in case of a named company, the selection and approval of the name poses a bit challenge due to the requirement that the name of the proposed company should not be similar to any existing incorporation.
Once the decision w.r.t. Jurisdiction of Incorporation, Type of Incorporation and Province of business have been taken, the next is to provide the following necessary information or documents:
D. First Directors of the Company
Every company must have atleast one director. The names of the first directors are required to be mentioned while applying for the incorporation. In case of Federal incorporation, there must be atleast 25% of the directors must be Canadian residents.
E. Class and number of Shares
A corporation may have one class of shares like common shares or may have many classes of shares. The company can also fix the number of its authorised shares or can keep the same as unlimited.
F. Articles of Association
A company with one class of shares and simple structure in all respect may opt for a pre determined Articles of Association as provided by the registration software. However if the company wants to have its own articles / clauses, then it may submit its own articles of association.
G. Payment of Fee and Certificate of Incorporation
After submitting the above information and requisite documents, the next step is to make the payment of the required fee. The Fee varies from jurisdiction to jurisdiction. On the payment of fee application can be submitted.
In case of a numbered company with pre-determined Articles of Association, generally the certificate of incorporation is issued without any delay. However in case of numbered company, it may take some time. After getting the Certificate, it is required for the company to ensure certain other compliances like obtaining the business number, Payroll Account number, GST / HST Number, calling of first board meeting, making of bye-laws of the company, opening of bank account etc. We also provide services of T1, T2 Tax & GST HST Return Filing.