Company Incorporation in Ontario

A corporation is legally distinct from its shareholders and directors. It is formed by filing articles of incorporation with the appropriate government authority, which then issues a certificate of incorporation. The business corporation acts in its own name, including when entering into contracts, and pays its own taxes.

There are a number of advantages to running a business via a corporation, although these may not apply to everyone. Since the corporation is a separate legal entity, the liability of its shareholders and directors is limited in the event of a lawsuit. In addition, the corporate tax rate, which is substantially lower than that of individuals, may allow tax deferral by deciding when dividends are paid.

In Canada, it's possible to incorporate both provincially and federally. Over time, provincial and federal incorporation laws have been largely harmonized. As a result, Ontario and federal corporations are very similar in terms of their incorporating legislation, although there are some technical differences. The vast majority of companies (especially the smaller ones) incorporate provincially. However, it may make sense to incorporate federally if the intention is to move the registered office to another Canadian province in the future, which is not possible under Ontario incorporation.

A shareholder is a person who owns shares in a corporation. Thus, the shareholder has no direct rights in the company's assets, but the shares he or she holds in the company confer rights. Fundamental rights include the right to vote at shareholder meetings, to receive dividends and to receive the remaining assets in the event of the corporation's dissolution or liquidation.

The articles of incorporation include the name of the corporation, which may have two versions: one English and one French. They also specify the number of directors of the corporation, which may be a fixed number, or a minimum and maximum number, allowing shareholders to set the number between these limits. The description of the different classes of shares (if there is more than one) is also set out in the articles. It may also contain provisions restricting the transfer of shares or other securities.

Although we are trained as lawyers, and licensed to practice law in Canada, this Ontario incorporation service is not a legal service. We prepare documents according to customer instructions, and offer a variety of standard organizational templates. For any questions of a legal or tax nature, customers are encouraged to consult a lawyer or tax specialist before using our services to incorporate their company.

Having several classes of shares with different rights provides greater flexibility. For example, sometimes the founder of a company wishes to issue shares to a new investor without conferring the right to vote at shareholder meetings. This also makes it possible to issue "preferred" shares, whose dividend amount is limited to an amount or percentage specified in the articles of association, as is the amount payable in the event of dissolution or liquidation.

Name searches are performed by ordering a NUANS report. The NUANS Report will list all identical or similar names used in the province, or nationwide for federal corporations.

A director is a member of the Board of Directors. Individually, he or she has no powers unless the Board specifically grants them. Directors make decisions by voting at Board meetings. Decisions are generally taken by majority vote, subject to any unanimous shareholder agreement. Officers are persons appointed by the Board of Directors to specific positions: President, Vice-President, Treasurer, Secretary. They may have detailed functions, and implement decisions taken by the Board of Directors.

GST/HST registration is done through the Canada Revenue Agency. Registration can be done by telephone or online. A number of details are required, including the directors' social insurance numbers. We offer tax registration services for all corporations we incorporate.

The "minute book" is a set of documents required by law for all corporations. These documents need not all be in the same binder. The minute book contains directors' and shareholders' resolutions, and various registers required by law, including the securities register showing the number of shares held by each shareholder. Following incorporation, resolutions must be passed, notably to issue shares, adopt by-laws, appoint officers and elect directors. These organizational resolutions form part of the minute book.

A resolution of the board of directors is required to authorize the issuance of shares. This resolution must specify to whom the shares will be issued, the number and class of shares that will be issued to him, as well as the consideration that the subscriber must pay in exchange. Ontario and federal law require shares to be fully paid for before being issued (unlike other jurisdictions, including Quebec and Nova Scotia). Following authorization for the issue of shares, a share certificate is delivered to the subscriber and the transaction is recorded in the corporate records.

Yes. However, in general the corporation must register in the provinces where it operates a business or has an establishment. Similarly, a corporation incorporated federally or in another province must register in Ontario in order to be authorized to carry on a business there.

The by-laws provide for different internal management rules for the corporation. These by-laws include rules relating to the quorum of shareholders' meetings, the functions of the officers, and the authority to sign documents on behalf of the company, among other things. The by-laws are adopted by the board of directors, and subsequently the shareholders can confirm, modify or reject them.