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Chapter 2 – Incorporating
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This chapter will help you prepare your incorporation application. However, we remind you that not all provisions of the CBCA are dealt with here.
Documents to file with Corporations Canada
Once you have decided to incorporate, you must file the following completed forms with Corporations Canada:
(Use this as a checklist to help ensure that your application is complete.)
Articles of Incorporation
"Initial Registered Office Address and First Board of Directors"
form
You must pay the prescribed fees:
Online filing: $200
or
By mail, fax, e-mail or in person: $250
If you are seeking approval of a corporate name, you must also provide:
a NUANS® report (the Canada-biased NUANS® search report). The report must
not be dated more than 90 days prior to the filing date.
information about the proposed name. We strongly suggest that you complete a "Corporate Name Information" Form.
2.1 The Role of Corporations Canada
When Corporations Canada receives your Articles of Incorporation, we will make sure that they have been properly completed and that the proposed name is acceptable. If so, we will then send you a Certificate of Incorporation, showing the name of the corporation, the corporation number and the date of incorporation, along with your Articles of Incorporation.
The date of incorporation is the date on which Corporations Canada receives the completed Articles of Incorporation and the fees. For administrative purposes, you may wish to request a later incorporation date when you file your articles.
Your corporation's name, incorporation date and other information will then be listed in the "Search for a Federal Corporation section" of the Corporations Canada website.
The original filing date cannot be preserved when an application is rejected for being incomplete. In other words, the original effective date is forfeited. An application is incomplete if it does not have all the necessary forms and schedules attached or it is not signed. The following are two common examples of incomplete applications: an application for incorporation that does not include the Initial Registered Office Address and First Board of Directors form or when item 4 of the Articles of Incorporation indicates that the information is on Schedule 1 and the application fails to include Schedule 1. In such cases, we will send you a notice indicating that the application is incomplete.
Where an application is complete but is rejected for being deficient (e.g. missing a consent for a corporate name), the effective date of the certificate can be the date of receipt of the original application provided that the applicant expressly requests this date when the application is resubmitted with the deficiency corrected.
2.2 How to File Your Articles of Incorporation
You can file your Articles of Incorporation and other related documents:
- online through the Corporations Canada Online Filing Centre. You will find helpful information about the online filing process on the website.
- by mail, fax, e-mail or in person. Our addresses and fax numbers are in the Contacts section.
Information on the incorporation process, including the required forms, are available through the Corporations Canada website.
How to file your Articles of Incorporation online?
It's easy!
- On the Corporations Canada website, go to the Corporations Canada Online Filing Centre.
- If this is your first visit, you must register as a new user with Strategis to access the Online Filing home page. If you are already registered, click on "Go to Online Filing."
- From the menu, select "Articles of Incorporation," then choose
one of the four incorporation options available:
- incorporation of a numbered name corporation (Corporations Canada will assign you the next number available);
- incorporation of a corporation with a name pre-approved by Corporations Canada (you must indicate the request number that appears in the right-hand corner of the Name Decision Letter);
- incorporation of a corporation where you want Corporations Canada to approve a name (you must provide the number and the date of the NUANS® report); or
- incorporation of a numbered name corporation that has been pre-reserved. (Please choose this option only if your numbered name has been pre-reserved.)
- Follow the menus provided to complete the necessary documents online.
- Pay the $200 filing fee through the secure online payment facility, using your American Express®, Visa® or MasterCard® account.
2.3 How to Complete the Articles of Incorporation
In this section, you will find advice to help you prepare your Articles of Incorporation. Items are presented in the order of appearance in the Articles of Incorporation. The provisions proposed in this chapter are those that are commonly used by incorporators and are not mandatory in any way. They are intended to serve as examples only. In addition, since these examples do not deal with all aspects of the CBCA, they should not be seen as a complete list of all possible provisions. Accordingly, you may wish to consult with legal counsel or other professional advisors before applying for incorporation.
Please see annexes A and B for examples of completed Articles of Incorporation.
Articles of Incorporation
2.3.1 The Corporation Name
or
If you want a numbered name:
- online: choose the option "Incorporation of a numbered name corporation," and follow the instructions
- in paper form: leave a blank space on the left, write in the word "Canada,"
and add the legal element of your choice, such as Inc., Ltd., Corp., etc.
Example: CANADA Inc.
Every corporation must have a name; it may be a corporate name or a numbered name. This name must be distinct from the names of all other corporations. Corporations Canada applies very rigorous standards when granting names. Note that numbered names are dealt with at the end of this section.
The documents Choosing a Name and the Name Granting Guidelines have more information to help you choose a name for your corporation.
What's in a name?
A corporate name contains three elements:
- a distinctive element (such as a surname or other unique term);
- a descriptive element (e.g. Manufacturing, Consulting, Trading); and
- a mandatory legal element (e.g. Corp., Inc., Ltd.).
Name request
If you want Corporations Canada to assign to you the exclusive use of a corporate name in Canada, you must provide two things:
A NUANS® Report — You must submit a Canada-biased NUANS® report. Note that a NUANS® report is valid for 90 days from the date of the report. If you do not apply to incorporate within this period, you will have to obtain a new report.
There are two ways to get a NUANS® report:
-
You can order a federal NUANS® report online and pay the $20 fee by credit card (American Express®, MasterCard® or Visa®).
The system provides direct access to the NUANS® Name Search System. However, it does not provide the professional assistance and recommendations often available from a registered NUANS® search house. Because of this, you should be sure that you understand the requirements you must meet before Corporations Canada will approve a name. The name in your NUANS® report may be rejected if it does not comply with CBCA name regulations.
You can ask for a report from a search house.
A search house is an independent, private-sector business that charges a fee for advice on the availability of your corporate name choice. You can find a list of these firms on the NUANS® website or in the Yellow Pages of your telephone directory under "Searchers of Records."
-
- Information about the name — The approval of the name may be facilitated if you provide information about your reasons for choosing the name. We strongly recommend that you use the Corporate Name Information form (available on our website). However, instead of this form, you may also submit a letter describing the corporation's activities, products and services, target clientele, where you expect the corporation to operate, and the origin of the distinctive element of the corporate name.
If you intend to do business in the Province of Quebec, please note that the Province of Quebec does not currently provide corporate name data to NUANS®. It is your responsibility to search the Quebec corporations' database (CIDREQ) to verify that the chosen corporate name is not used in Quebec by another business. You do not have to provide a CIDREQ report with your Articles of Incorporation.
Is the name acceptable?
Corporations Canada will review your proposed name to determine if it can be assigned to you. The decision will be based on several criteria. For example:
- Does the proposed name contain any prohibited words or phrases, such as "Parliament Hill," "RCMP," "Cooperative," "Air Canada," and "United Nations"?
- Is it obscene?
- Is it too general?
- Is it only a geographical name such as North West Inc., or only an individual's name such as Joe Smith Inc.?
- Is it so similar to the trade-mark or official name of another corporation that both names appear to refer to the same business? Or is it so similar that it appears to be related to the other business?
- Does the proposed corporation have a foreign affiliate with a similar name? If so, you may need to provide us with written consent from the foreign affiliate and add an element to your proposed name to distinguish it, such as ABBA Consulting Canada Inc.
If your name is refused
Corporation founders are sometimes surprised to learn that Corporations Canada has refused to grant a proposed name, particularly if a NUANS® report appears to indicate that no similar names exist. However, we must reject a proposed name if we do not have enough background information on which to base a decision.
If Corporations Canada rejects your proposed name, the application for incorporation is also rejected. In this case, we will send you a letter stating the reasons for the rejection. You can then submit a revised application using the same corporate name, or a completely different name, and provide the additional information described in the rejection letter.
In a case like this, you do not need to pay the fees again because Corporations Canada retains the fees paid at the time of the first request in the expectation that you will submit supplemental information. However, you may need to obtain a new NUANS® report if the report date is beyond the 90-day limit or the name you are proposing is different from the name proposed in the original application.
Pre-approval of name
If you would like us to approve the corporate name you have chosen before you file your Articles of Incorporation, you may write to us (see the Contacts section) requesting a Name Decision Letter. This request should be accompanied by your NUANS® report. We strongly recommend that you also submit a completed "Corporate Name Information" Form at the same time. If we accept the name you choose, we will let you know by letter that the selected name is reserved for 90 days from the date of the NUANS® report. You may then prepare your Articles of Incorporation.
If, on the other hand, we do not accept the name you have chosen, you will be spared the effort of compiling and submitting the Articles of Incorporation with that name.
Instead of asking Corporations Canada to approve a name for your corporation, you can also choose to have a number assigned (e.g. 1234567 Canada Ltd.) when we process your Articles of Incorporation. In such cases, Corporations Canada simply assigns the next available number when processing the articles. You must ask for a number name when you apply for your Articles of Incorporation. A NUANS® report is not needed.
Many firms choose this option when a corporate name is not important to their business. This ensures faster processing and saves the expense of a NUANS® report.
Another option is to apply for a number name and ask for a name change later. To replace a number name by a corporate name, you must amend your Articles of Incorporation by filing Articles of Amendment and paying the $200 fee. In this case, a NUANS® report is required.
Some incorporators choose this option when they want to incorporate a business but do not have enough time to obtain approval for a corporate name.
2.3.2 The Registered Office
Every corporation must have a registered office within Canada. This is primarily so that Corporations Canada, shareholders, directors and the public can send documents to the corporation. A post office box cannot take the place of a registered office.
When you complete your Articles of Incorporation, you need only indicate the province or territory in Canada where the registered office is to be located. You do not have to provide a street address.
2.3.3 Description of the Classes of Shares
An incorporated business must issue at least one class of shares. Shares represent an ownership interest in the corporation. They are property, much like a car or a house. Share owners can transfer (sell) their shares and the rights that go with them (you may hear the phrase "rights that are attached to the shares"). Such a transfer must conform to any conditions or restrictions that apply to the shares.
Any "person" may hold shares in a corporation. In addition to an individual, a "person" may include a legal entity such as a trust, a mutual fund or another corporation.
Classes of shares
Generally, shares have three inherent rights:
- the right to vote;
- the right to receive dividends (if the board of directors has declared any); and
- the right to receive the remaining property of the corporation after it is dissolved.
All shares are without nominal or par value; that is, no specific value is attributed to them and no value appears on the share certificate.
You may vary the composition and complexity of your corporation's share structure in a number of ways to suit your circumstances. Your Articles of Incorporation may allow for one or more classes of shares. There is no limit on the number of classes of shares you may set out in the Articles of Incorporation. You may describe shares using class names such as preferred or common, or use letters, such as Class A, Class B, etc.
Where there is more than one class, you must set out the rights, privileges, restrictions and conditions for each class. You must assign the rights set out above (voting rights, the right to receive dividends, the right to receive the corporation's remaining property on dissolution) to at least one class of shares but one class does not need to have all three. If you create only one class of shares, that class will carry all these rights.
Articles of Incorporation with more than one class of shares often provide for unlimited common and preferred shares. Usually the common shares have the right to vote, the right to receive dividends after preferred shareholders, and the right to share in the property upon dissolution. Preferred shares usually have no voting rights but are given the right, ahead of the common shares, to receive dividends and to share in the property on dissolution. If the Articles of Incorporation describe only one class of shares, they are usually referred to as common shares.
These differences in rights can be useful if you have investors with different objectives. Voting shares are often issued to the person(s) actually running the company (control shares), whereas preferred shares may be issued to partners or investors who are not involved in running the business but who have invested money in the company with the expectation of profit (investment shares). Thus, the common shareholder (having votes) runs the company (with the power to elect directors, approve all major activities, etc.) but may only be entitled to receive dividends after the preferred shareholders.
A new corporation may not need different classes of shares at the time of incorporation. If your corporation becomes a success and then needs a more complex share structure, you should seek professional advice to make sure you have the best structure and to properly prepare any changes to your Articles of Incorporation.
2.3.4 Restrictions on Share Transfers
When you are incorporating your business, you must decide whether to restrict the transfer of your corporation's shares. Such restrictions enable the shareholders and directors to control who holds shares in a corporation by limiting the ability of shareholders to resell their shares. These restrictions must be described on share certificates issued to shareholders.
The most frequent share transfer restriction prevents a shareholder from transferring shares without the prior consent, by way of resolution, of the board of directors or a majority of the shareholders.
For your corporation to avoid being designated as a reporting issuer under provincial securities legislation and consequently as a distributing corporation under the CBCA, you must include in your Articles of Incorporation a statement that restricts the transfer of the corporation's securities without the consent of the majority of the directors or shareholders. Distributing corporations must comply with the registration and prospectus filing requirements and other related procedures set out in the CBCA and in provincial/territorial securities law.
To restrict the transfer of shares, you should include the following statements in your Articles of Incorporation:
- at the item entitled Restrictions on shares transfers —; a statement restricting the transfer of the corporation's shares; and
- at the item entitled Other provisions —; a statement restricting the transfer of the corporation's securities.
If you later decide to offer shares publicly, you will have to remove these restrictions by submitting Articles of Amendment and paying the $200 filing fee. All previous share issuances would remain valid, however, because your corporation would not have been subject to the registration and prospectus requirements under securities law.
2.3.5 Number of Directors
In your Articles of Incorporation, you must indicate a minimum and maximum number of directors, or a fixed number. We recommend that you provide for a minimum and maximum number of directors rather than a fixed number. This will offer more flexibility and may help you avoid the expense of submitting Articles of Amendment if you decide to change the number at some time in the future. Note, however, that your corporation must have at least one director.
2.3.6 Restrictions on Activities
Set out the restrictions, if any, on the corporation's business activities. Most corporations do not provide any restrictions and simply write "None."
If for some reason you want to limit the commercial activities of the corporation, we recommend that you use this preamble: "The business of the corporation shall be limited to the following: …" Complete the preamble by defining the limits you want to impose on the corporation.
2.3.7 Other Provisions
You may want to include other provisions in your Articles of Incorporation. For example, some incorporators decide to include clauses in the articles that will satisfy the requirements of other legislation or institutions.
Here are some examples of such provisions. Please note that these are examples, not a complete list. Note, too, that there is no requirement to include provisions like these in your Articles of Incorporation.
- A provision restricting the transfer of the corporation's securities. As we said in Section 2.3.4 Restrictions on share transfer, if you want your corporation to avoid designation as a distributing corporation under provincial securities legislation, then you must include a statement that restricts the transfer of the corporation's securities.
- A provision regarding directors' borrowing powers and the delegation of those powers to limit the authority of directors and/or to satisfy the requirements of lending institutions.
- A provision that increases the size of the majority required when shareholders vote.
- A provision that specifies the form of your corporate name for use outside Canada. Do not use this item to designate the English or French form of the corporate name for use in Canada. For this, use the item entitled Corporation Name.
- A provision that prescribes how shareholders will fill a vacancy on the Board of Directors.
- A provision that specifies what constitutes a quorum of directors.
2.3.8 Sign Your Articles of Incorporation
Articles of Incorporation must be signed by the incorporator(s), all of whom must be competent, at least 18 years of age and not in a state of bankruptcy. Although incorporators may be directors or shareholders of the corporation after it is organized, there is no legal requirement for them to assume such roles.
If the incorporator is a body corporate (i.e. another corporation), the name provided must be the name of the body corporate; the address must be its registered office; and the Articles must be signed by a person authorized to sign on behalf of the body corporate.
If you are filing forms through Corporations Canada's Online Filing Centre, you must provide the name of the incorporator in printed form in the appropriate box. You must also retain printed and signed copies of the documents in the records of the corporation. Forms sent by mail must bear the original signatures of the incorporators. A typed name is not adequate as a signature. Where Articles of Incorporation are sent by fax, the signature on the articles is considered to be original. However, this signature cannot be in printed form.
2.4 How to Complete the Initial Registered Office Address and First Board of Directors Form
In this section, you will find advice to help you prepare the Initial Registered Office Address and First Board of Directors form. Items are presented in the order of appearance in the form. Please see annexes A and B for examples of completed Initial Registered Office Address and First Board of Directors form.
2.4.1 The Corporation Name
You must provide the same name that is indicated in the Articles of Incorporation.
2.4.2 Address of Registered Office
You must provide the street address of the registered office, and a mailing address, if different from the street address. These addresses allow Corporations Canada to contact you for various reasons, such as to send you reminder notices regarding the Annual Return or information that can affect the business of your corporation.
Please see Section 5.2 Change of Address of a Registered Office for information on what to do if your corporation changes its address after its incorporation.
2.4.3 Choosing the Directors
It is important to indicate the residential address of each director. This information allows Corporations Canada and others to send notices to the directors if required. Corporations Canada does not publish the residential addresses of directors on its website. However, this information is provided upon written request.
2.4.4 Signature
The form must be signed by one incorporator. If the person signing is a body corporate (i.e. another corporation), then the form must be signed by a person authorized to sign on behalf of the body corporate.
If you are filing forms through Corporations Canada's Online Filing Centre, you must provide the name of the incorporator in printed form in the appropriate box. You must also retain printed and signed copies of the documents in the records of the corporation. Forms sent by mail must bear the original signatures of the incorporators. A typed name is not adequate as a signature. Where Articles of Incorporation are sent by fax, the signature on the articles is considered to be original. However, this signature cannot be in printed form.
2.5 Pay the Filing Fee
- Through the Corporations Canada Online Filing Centre: $200; or
- By mail, fax, e-mail or in person: $250
You may pay your fees:
- online or by fax: using a credit card (American Express®, MasterCard®, or Visa®)
- by mail: using a credit card (American Express®, MasterCard®, or Visa®) or cheque (made payable to the Receiver General for Canada)
- in person: using a credit card (American Express®, MasterCard®, or Visa®), cheque (made payable to the Receiver General for Canada) or cash.
When you pay through the Corporations Canada Online Filing Centre, you can be confident that the Strategis Secure Online Electronic Commerce System will process your transaction with complete security.
