Incorporation Frequently Asked Questions
Incorporation Frequently Asked Questions
Q: Who can form a corporation?
A: One or more individuals who are 18 years of age or older, is not of unsound mind and who are not a bankrupt may form a corporation under the Canada Business Corporations Act (CBCA). Similarly, one or more companies or “bodies corporate” may incorporate a company. These persons are called incorporators. An incorporator (individual or corporation) may form a corporation whose shareholders, officers and directors are other persons, or may serve as the sole director, officer and shareholder of the company. An incorporator is also responsible for organizational procedures, such as filing the articles of incorporation and designating the first directors.
Q: What are the benefits of incorporation?
Limited liability: potential loss limited to amount invested in the corporation.
Perpetual existence: corporation continues on after the death of the individual.
Tax advantages: accountants will recommend incorporation once revenues reach a certain point.
Raising capital: corporate form of business organization easier to raise capital through the sale of shares.
Q: What is Corporations Canada responsible for?
A: Corporations Canada is the country’s federal corporate regulator. It administers the laws that allow Canadians to create and maintain a corporation under the federal laws governing corporations in Canada. It should be noted that banks and trust companies are incorporated by the Office of the Superintendent of Financial Institutions.
Q: What are the laws that Corporations Canada administers?
A: Corporations Canada is responsible for the administration of the following laws:
- Canada Business Corporations Act
- Canada Not-for-profit Corporations Act
- Canada Corporations Act
- Boards of Trade Act
- Canada Cooperatives Act.
It is also responsible for compliance activities under these laws, as well as for registering railway deposits and issuing official documents under the Great Seal of Canada.
Q: What are the benefits of incorporating at the federal level?
Heightened name protection: Corporations Canada applies very tough tests before granting a company the right to use a particular name. When a company’s name is approved, it’s protected across the country – a status second only to trade-mark protection. (Please note that the Province of Quebec does not currently provide data to Nuans. For your own protection, if you are doing, or intend to do business in the Province of Quebec, you should search the Quebec corporations database at Registraire des entreprises du Québec as well.
Right to carry on business anywhere in Canada: Federally incorporated companies can carry on business anywhere in Canada, and the CBCA does not set restrictions regarding the province or territory where the head office is located, corporate records are maintained and annual general meetings are held.
Recognition: Federal incorporation is often considered a sign of distinction, companies incorporated under the CBCA receive global recognition as Canadian companies.
Excellence in Client Service: Corporations Canada offers high quality service: it offers clients an online service that allows you to send documents, pay fees, and receive documents and acknowledgments back from the Director under the CBCA, via the internet.
Q: Is it better to incorporate or to register (as a sole proprietor/partnership) one’s business?
A: This depends on the particular situation: the type and the size of business, the risks involved, the number of people involved, the geography covered and the tax situations of the individual involved.
Q: Can a corporation have a P.O. Box (Postal Office Box) as the Registered Office address?
A: No, the registered office must be a street address.
The purpose of the Registered Office is to have a location for service of a notice or document required to be sent or served on a corporation (section 254 of the CBCA). Where it is impossible for a corporation to have a street address (certain remote communities in the Territories do not have street addresses) then a detailed description of the Registered Office location and a P.O. Box address may be acceptable. This is, however, to be determined on a case-by-case basis.
Q: What is the distinctive element in a company name?
A: The distinctive element of a corporate name is the element of a name that sets you apart from other similar businesses (e.g. Starbucks Coffee Shop). “Coffee Shop” does not distinguish itself in any way from other businesses in that industry, whereas “Starbucks” does and is considered the distinctive element. Made-up words are acceptable as distinctive elements, provided they do not conflict with others already registered.
Q: What is the descriptive element in a company name?
A: The descriptive element of a corporate name is the part of the name that indicates the nature of the business of the company (e.g. Starbuck Coffee Shop). The descriptive element can be specific such as “Coffee Shop”, or it can be more general, such as “Enterprises”.
Q: What is a numbered name?
A: A numbered name is the incorporation number generated by the Corporate Registrar. You cannot choose your incorporation number. It will be assigned by the Corporate Registrar when the incorporation application is filed.
Q: What is the difference between a distinctive name and a numbered name?
A: There is no legal difference between a distinctive name and a numbered name.
Q: How long does it take to reserve a Company’s name?
A: A name reservation typically takes 2-5 business days; however, this time can vary depending on the volume of names being handled by the Corporate Registrar at any given time.
Q: Can I expedite a corporate name request?
A: Yes, a name reservation can be expedited for an additional fee. Please contact us by phone to process an expedited name request.
Q: Can I have more than one word for the distinctive element?
Q: Can I have more than one word for the descriptive element?
Q: Are there any words that cannot be used in a Company’s Name?
A: Yes there are words and symbols that will not be approved by the Corporate Registrar if used in a company name.
All punctuation marks displayed on a standard 101/102 keyboard are acceptable; however, a punctuation mark cannot be the first character of a name. Other symbols and characters not found on a standard keyboard will not be approved.
Well-known names and trademarks will not be approved (e.g. Starbucks Tea Room Inc.). A name that closely resembles or is identical to another company name will not be approved.
Any word that implies a connection with the government will not be approved without the written consent from the government (e.g. “government”, “ministry”, “bureau”). In other words, any words that suggest a connection to the Royal family will be denied (e.g. Prince William Shoe Shop Inc.).
The use of “British Columbia” or “B.C.” at the beginning of a name as the distinctive element will not be approved without the written consent from the government (e.g. British Columbia Incorporations Inc.). The use of “British Columbia” or “B.C.” at the end of the name before the corporate designation will normally be accepted (e.g. Snap Incorporation BC Ltd.).
The Corporate Registrar will not approve any names that contain words that could be considered vulgar, obscene, racial or as sexual slurs.
Finally, there are restrictions on the use of certain words surrounding professionals including but not limited to the use of the words “engineering”, “dental corporation” and “law corporation”. That is to say approval of names using these terms is often dependent upon receiving written consent from the governing bodies for such professionals.
Q: Can I use the same name as another Company?
A: No, a company name cannot be the same or similar to another registered company name in British Columbia.
Q: Is my name protected against other businesses using it?
A: Once your name is registered with the Corporate Registrar and you have received a name request number, other companies in British Columbia will be prevented from registering the name. While this does ensure that other company’s cannot register the name, it does not necessarily protect against other company’s or businesses using the name.
Q: If I decide on a numbered name, can I choose a distinctive name it later on?
A: Yes, a company can change its name at anytime, but there are filings that must be filed with the Corporate Registrar.
Q: Can I change my company’s name at a later date?
A: Yes, a company can change its name at anytime, but this is a technical process requiring compliance with the Business Corporations Act and related filings with the Corporate Registrar.
Q: How can I tell if my proposed company name is available?
A: There is no sure way to determine if a company name is available short of submitting a name reservation request with the Corporate Registrar; however a search engine search and search of the Canadian trademark registry may be useful to determine if other businesses are currently using the name.
Q: What is a shareholder?
A: Shareholders are the owners of the company. The respective interests of the owners of a company are represented by the number of “shares” they own in the company. So Share certificates are evidence of an owner’s shares in the company.
Q: Do owners need to be residents of Canada?
A: No; however, there are certain laws that companies controlled by non-Canadian residents must comply with.
Q: How many owners does a Company need to have?
A: A company may have as many owners as it desires; however there are additional reporting requirements for companies with more than 50 shareholders.
Q: Can a corporation be an owner?
A: Yes, a corporation may be an owner in another corporation.
Q: Will my company’s owners get share certificates?
A: Yes, we will prepare share certificates for the owner’s of your company.
Q: Do owners need to pay for their shares?
A: Yes, shares cannot be issued unless there is some form of consideration. In most circumstances, upon incorporation shares are issued at a price of $0.01 per share. Shares must not be issued until the company has received payment in full.
Q: What shares are being issued to the owners?
A: All owners will receive their proportionate interest of Class A Voting Common shares. This class of shares will enable the holder to vote on matters requiring owner approval as required by B.C. corporate laws in accordance with each owners respective shareholdings. In addition, this class of the shares will enable the owners to participate in the profits of the company in accordance with their respective shareholdings.
Q: What is a director?
A: The directors of the company are the managers of the company and are responsible for making business decisions on behalf of the company.
Q: Do the directors of a company need to be owners?
A: No, directors of the company do not need to be owners. Likewise owners of the company do not need to be directors.
Q: Can a person be an owner and a director?
A: Yes, a person may be an owner and a director.
Q: Can a company be a director?
A: No, a director must be an individual.
Q: Who cannot be a director of a company?
a) under the age of 18 years,
b) found by a court, in Canada or elsewhere, to be incapable of managing the individual’s own affairs,
c) an undischarged bankrupt, or
d) convicted in or out of British Columbia of an offence in connection with the promotion, formation or management of a corporation or unincorporated business, or of an offence involving fraud, unless
i) the court orders otherwise,
ii) 5 years have elapsed since the last to occur of
A) the expiration of the period set for suspension of the passing of sentence without a sentence having been passed,
B) the imposition of a fine,
C) the conclusion of the term of any imprisonment, and
D) the conclusion of the term of any probation imposed, or
iii) a pardon was granted or issued under the Criminal Records Act (Canada).
Q: How many directors does a company need to have?
A: A company must have at least one director at all times. A company may have as many directors as the owners determine at any given time.
Q: Can I add directors at a later date?
A: Yes, the owners of the company may elect to add directors at any time.
Q: What is an officer?
A: An officer is a person typically tasked with handling the day-to-day management of the company. The directors of the company may specify the duties of the officers.
Q: Do the officers of a company need to be directors?
A: No, officers of the company do not need to be directors. Likewise, directors of the company do not need to be officers.
Q: Can a person be an officer and a director?
A: Yes, a person may be an officer and a director.
Q: Can a person be an officer, director and owner?
A: Yes, a person may be an officer, director and owner.
Q: Do officer’s titles have any legal significance?
A: No, officer titles do not hold any legal significance or dictate the duties of the officer.
Q: Can an officer resign?
A: Yes, an officer can resign at any time by providing written notice to the company.
Q: Can I add officers at a later date?
A: Yes, the directors of the company may elect to add officers at any time.
Q: What is a registered office?
A: The registered office of the company is the location where documents (often notice of a law suit) must be served on the company to be effectively served or to meet the requirements of the laws of British Columbia. The location of a registered office must be open during regular business hours Monday through Friday. Therefore care should be taken when selecting a registered office because there are often time limits for replying to notices of law suits and if a company fails to respond within the required time period, then the applicant may apply for a judgment without further notice to the company.
Q: What is a records office?
A: The records office of the company is a location where the records of the company are held as required by B.C. corporate laws. Therefore also care should be taken when selecting a records office because if a person who is entitled under the B.C. laws to obtain a list, to inspect a record or to receive a copy of a record from the records office of the company and the records office fails to comply then the person seeking the record may, on notice to the company, apply in writing to the Corporate Registrar for an order. So without limiting the power of the Corporate Registrar, the court may on application make the order it considers appropriate and may without limitation order the company to pay to the person who requested the record damages in an amount that the court considers appropriate.
Q: Can the registered office and records office be located at different locations?
A: Yes, the registered office and records office may be located at different locations; however, both must be located within the province if it’s incorporated provincially. It can locate anywhere in Canada if incorporated federally.
Q: Can the registered office and records office be located at the same location?
A: Yes, the registered office and records office may be at the same location.
Q: Can I change my company’s Registered and Records offices at a later date?
A: Yes, a company may change its registered and records office at any time by agreement of the directors. There are filings with the Corporate Registrar that must be completed to document a change of registered and records offices of a company.
Q: Does my Company’s registered and records address need to be in the same city that the company carries on business?