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Federal incorporation is slightly cheaper than provincial incorporation due to the lower government filing fees, however, a federal corporation is also required to extra-provincially register (and carry out annual maintenance) in any province in which it carries on business. This can make federal incorporation more expensive in the long run, since provincial corporations are only required to register in multiple jurisdictions if they carry on business in multiple jurisdictions.
Federal incorporation is typically preferred by businesses that:
Provincial incorporation is typically preferred by businesses that:
Most provinces and territories have strict rules with respect to who may and may not carry on business in their jurisdiction. If a corporation wishes to carry on business in a province or territory and wasn't incorporated there, it most likely has to register before, or within a short period of time after commencing business activities.
The level of work or business being carried that will led to a registration requirement varies by jurisdiction, however, things like having a local phone number, having local sales people, a local office, or being listed in a local directory (such as a phone book), can be sufficient to require extra-provincial registration.
Registration usually requires payment of a registration fee, and also requires completing annual reporting requirements.
The requirements for extra-provincial registration vary by province and the penalties for failing to comply can be significant. Accordingly, we recommend speaking with a business lawyer before carrying on any type of business or even looking for business in any province or territory other than where your corporation was incorporated.
A corporate minute book is a binder containing corporate records of the corporation.
By law, corporations are required to maintain certain records with respect to their shareholders, directors and officers, as well as important decisions that have been made by the corporation. A minute book also holds other corporate records such as the Certificate of Incorporation, corporate By-laws and records of share ownership. A minute book is a central place for storage of all of this information.
Many incorporation websites will sell you a minute book, but will only give you blank documents for you to fill in. In our experience, this often leads to corporate records not being kept or being completed incorrectly, which can cause significant problems in the future.
The minute books we provide upon incorporation (whether physical or digital), contain all of the corporate resolutions, By-laws, registers, ledgers and other documents required to properly set up the corporation and record organizational decisions.
By law, a corporation is required to maintain certain corporate records at its corporate records address. This information must be made available to persons entitled to access it, which can include shareholders, directors, creditors, and members of the public. In many jurisdictions, the law does not specifically require these records to be kept in physical form, so long as they are readily accessible at the records address and can be reproduced easily for those entitled to view them. Accordingly, in these jurisdictions, a physical minute book is not required.
Having all records stored digitally, can actually save a corporation some hassle and expense, as the corporate records can be easily shared with accountants, bankers, potential purchasers, and others who might require access. Of course care must be taken to keep the information private and secure.
Despite the fact that many jurisdictions don't require physical minute books, many corporations prefer to have one. They prefer to keep all originally signed records in a central location, including the share certificates for each shareholder. This can prevent things from being lost and can provide a sense of security.
As the use of digital signatures becomes more prevalent, the preference for keeping a physical minute book will likely fade.
Our basic incorporation package includes a physical minute book only. A physical minute book can be added as an optional item. Purchasers of our ALL IN package will receive a physical minute book AND a digital copy of all records within the minute book for convenience and ease of share with other professionals (such as accountants and bankers).
Our corporate law services include the following:
As the registered office and records address, we will be a place at which notices and claims can be delivered or served upon the corporation. This can be beneficial as it provides notice to anyone filing a claim against the corporation that it has readily accessible legal representation, and ensures that someone is available to receive the claim or notice and forward it to you for response within the time frame required to prevent a default judgement from being granted against the corporation.
Full details of our corporate law services will be contained in a Registered Office Agreement to be signed by an authorized representative of the corporation after is has been registered.
A registered office is an official address of a corporation. A corporation must have a registered office in the jurisdiction in which it is registered.
The registered office is a place at which legal documents can be served upon the corporation. These legal documents include civil claims (if the corporation is being sued), property tax notices, and annual return notices, among others.
A corporation's registered office must be accessible to the public during normal business hours. It's also listed publicly.
For these reasons, it's common for corporations to appoint a law firm to act as the registered office of a corporation.
A records address is the place at which the corporation's corporate records are stored. The records address can be the same as the registered office, and must must also be accessible to the public during normal business hours. Certain corporate records must be made available to members of the public, shareholders, directors and creditors upon request. Failure to provide such access may lead to a fine of up to $5,000 and potentially imprisonment (although this is very rare). It's common for corporations to appoint a law firm to act as the records address of a corporation as well as the registered office to ensure that records are made available when and to whom as required by law.
By law, a corporation is required to appoint an auditor of the corporation, however, non-distributing corporations (generally smaller private corporations), are entitled to waive the requirement to appoint an auditor, and can waive the requirement for the corporation to provide audited financial statements in each year.
It's safer to require audited financial statements as it provides a higher level of financial review, however, because audited financial statements can be expensive to obtain, we find that small private businesses usually prefer to waive the requirement to appoint an auditor for the corporation and prefer instead to appoint an accountant or accounting firm to act as accountants and accounting advisors only, rather than as auditors.
A fiscal year end is also known as the tax year-end or financial year end for a corporation. It is the end date of a corporation's annual reporting period for accounting purposes.
Our organizational resolutions include the approval of a fiscal year end for the corporation. It can be changed at a later date with the approval of the Canada Revenue Agency.
It's typically best not to have the fiscal year end occur during a very busy season as it may be difficult to gather and process the necessary paperwork.
If you're unsure what date to use for the fiscal year end, we recommend discussing the issue with your accountant.
Numbered corporations are automatically assigned a number by Alberta Corporate Registry. The legal element of a numbered corporation (Ltd., Inc., or Corp.) can be chosen by the incorporator. An example of a numbered company is 123456 Alberta Ltd. They are no different than named corporations in terms of their legal effect, rights, etc.
In most cases, numbered corporations are not used by businesses that have ongoing business operations, as a numbered name is not ideal from a branding perspective.
If you choose a numbered corporation, you can change the name at a later date, however, this will requiring filing Articles of Amendment, which will come at an additional cost (currently $250-$450 if done through our office).
If you choose a named corporation, we'll need to confirm the availability of your proposed name prior to registration. This requires that we order a NUANS name search which is an additional cost to you. If you have a name for your business, we recommend registering a named corporation.
All named corporations are required to have both a distinctive element and a descriptive element in the name, unless the name has generated a significant reputation in the jurisdiction of registration through prior use.
A "distinctive element" is the part of the name that sets your business apart from others. Examples include "AAA", "Twin River", and "Xerox".
A "descriptive element" is the part of the name that describes what it is that you do. Examples include really specific things such as "Plumbing" and "Copy Centres" and more generic descriptions such as "Holdings" or "Enterprises".
The following is a list of additional restrictions applicable to the naming of your new corporation:
1) The name cannot be identical to any of the following:
Names will be considered identical if the only change is the addition or deletion of punctuation marks or spaces.
2) The name cannot be similar to the names of:
Names will be considered similar if use of the name could reasonably lead others to believe that the new corporation is the same as or associated with the previously registered corporation. Names will also be considered similar when:
3) Unless a name has acquired a distinctive meaning, the name must not be:
4) The name must not include family or personal names, unless the appropriate individual consents or the corporation has obtained consent from a similarly-named predecessor corporation.
5) The name must contain only English language characters, Arabic numerals, or permitted special characters, and the first character must be an English language character or Arabic numeral.
6) The name must not consist of only punctuation marks or special characters.
7) The name must no contain a year, in parenthesis, unless the corporation is a successor corporation.
8) The name must not be obscene.
9) The name must not appear to be a numbered name (i.e. 12345 Alberta Ltd., or 234512 Holdings Corp.). If the name contains less than 5 or more than 8 consecutive numerals and does not appear to be a numbered corporation (such as [insert number] Alberta Ltd.), numerals are acceptable.
10) The name must not include the words "chamber of commerce" or "board of trade".
11) The name must not suggest that the corporation carries on business under government patronage, approval or authority or that indicate the corporation is sponsored or controlled by or affiliated with the government, without the written consent of the appropriate government body (e.g. Alberta Municipal Affairs Corp., or City of Calgary Social Services Ltd.).
12) The name must not suggest that the corporation is sponsored or controlled by a university, college, or technical institute, or a professional or other occupational association that is regulated by provincial or federal legislation, unless they have written consent from that organization.
13) The name must not imply the corporation is a government-regulated bank, loan corporation, insurance corporation, trust corporation, stock exchange, or other financial institution such as a credit union, unless government consent has been obtained.
Registering a corporate name provides some limited protection against others using the same or a similar name in the jurisdiction in which you've registered (either in a single province if you've registered provincially, or across Canada if you've registered federally). However, name protection provided by incorporation is very limited as compared to a registered trademark. If you have a strong brand or are concerned about others using the same or a similar business name in Canada, we strongly recommend pursuing a registered trademark for your business name. Ideally, this process should be started prior to incorporation in order to determine whether your proposed name is likely to be available for registration as a trademark.
If you'd like more information with respect to trademark protection and protecting your brand, feel free to contact a trademark lawyer at Twin River Law for more details.
Shareholders are the owners of the corporation. Unless they are also directors, officers or employees, they are not involved in the day to day operations of the business.
Shareholders are typically entitled to receive a dividend on their shares which are paid out of the profits of the business.
Where there are multiple shareholders, we strongly recommend that the shareholders enter into something called a Unanimous Shareholder Agreement which sets out the respective rights and obligations of the shareholders.
If you'd like more information with respect to Unanimous Shareholder Agreements, feel free to contact an Alberta business lawyer with Twin River Law for more details.
Typically, common shares are equity shares, meaning their value increases and decreases with the overall value of the corporation. Unless there are special circumstances requiring something different, this is the only type of shares typically issued upon incorporation.
Preferred shares are most often worth a fixed value, meaning, their value doesn’t change with the overall value of the corporation. Fixed value preferred shares are typically used for tax or transition planning purposes and aren’t issued at the time of incorporation. The word “preferred” refers to the fact that these shares are entitled to be paid out in “preference” to the common shares of the corporation in the event of a liquidation or dissolution of the corporation.
As the name implies, holders of voting shares are entitled to receive notice of and vote on important decisions made by the corporation. Voting shareholders are required to make certain decisions on an annual basis, such as approving the financial statements of the corporation.
Holders of non-voting shares are not entitled to vote on the vast majority of decisions made by the corporation, but they may be entitled to vote on certain decisions, such as the decision waive the requirement for the corporation to prepare audited financial statements each year, and to sell all or substantially all of the assets of the corporation.
Our corporate law services (included for 1 year with our ALL IN package), include preparation of annual resolutions of the directors and annual resolutions of the shareholders as required by law.
If you have any questions about whether to issue voting or non-voting shares, let us know in the comments section under the "Additional Information" section of our incorporation form, or by contacting a business lawyer with Twin River Law LLP.
Directors are appointed by the shareholders and control the corporation. They owe a fiduciary duty (a duty of utmost good faith) to the corporation and make decisions such as:
1) when and in what amounts to pay shareholders
2) whether to obtain financing
3) whether to hire new employees
4) whether to enter into a new lease or purchase agreement
By default, directors also have general signing authority on behalf of the corporation.
A director's rights and duties can be modified or changed by resolution, unanimous shareholders agreement, or by providing to the contrary in the corporation’s by-laws.
In order to qualify as a director, an individual must:
1) be at least 18 years of age;
2) not be subject to a finding of mental incapacity in any jurisdiction;
3) not be bankrupt.
In some jurisdictions, a certain number of the directors must also be Canadian residents. In Alberta for example, at least 1/4 of all directors must be residents of Canada.
Directors can be liable for decisions made while acting as a director, as well as for acts or omissions of the Corporation in certain circumstances.
Examples of potential causes of liability for directors include:
1) failing to deduct/withhold and remit certain statutory deductions from employees for wages and benefits;
2) the corporation failing to remit certain taxes required by the Excise Tax Act(Canada);
3) falsification of records, or filing incorrect reports, returns or notices required by law;
4) authorizing the payment of dividends or the redemption of shares where such dividends or redemption would result in the corporation being insolvent or unable to pay its liabilities as they become due;
5) failure to pay wages to employees; and
6) otherwise carrying out their duties as a director in an improper manner.
If you would like more information with respect to the potential liabilities that may arise as a result of acting as a director or officer of a corporation feel free to contact a business lawyer with Twin River Law LLP for more information.
Directors can be paid for services rendered as a director. If you are considering making payments to a director, we strongly recommend that you seek assistance from an accountant or financial advisor first, since the manner in which payments are made to shareholders and directors can have a significant impact on the amount of taxes payable.
If you'd like a referral for an accountant, please feel free to contact a business lawyer with Twin River Law LLP.
Officers are appointed by the directors of a corporation. In most small private corporations they carry out small, mainly ceremonial roles that are set out in the corporation's By-laws.
Rules regarding the appointment of officers vary by jurisdiction and can change depending on a corporation's By-laws, Articles of Incorporation, and any Unanimous Shareholder Agreement that may be in place.
For more information contact a business lawyer with Twin River Law LLP.
Rules regarding the appointment of officers vary by jurisdiction and can change depending on a corporation's By-laws, Articles and any Unanimous Shareholder Agreement.
For more information contact a business lawyer with Twin River Law LLP.
Like directors, officers can be liable for the acts or omissions of the corporation.
Like directors, officers owe a duty of care to the corporation in exercising their powers and carrying out their duties. This means that they are required to:
1) act honestly and in good faith with a view to the best interests of the corporation; and
2) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
If you would like more information with respect to the potential liabilities that may arise as a result of acting as an officer of a corporation feel free to contact a business lawyer with Twin River Law LLP for more information.
Officers can be paid for services rendered as an officer. If you are considering making payments to an officer, we strongly recommend that you seek assistance from an accountant or financial advisor first, since the manner in which payments are made to shareholders, directors and officers can have a significant impact on the amount of taxes payable.
If you'd like a referral for an accountant, please feel free to contact a business lawyer with Twin River Law LLP.