Incorporations (Ontario & Canada)

Please note that all fees quoted below are in Canadian funds. The federal Goods and Services Tax (GST) of 6% will be added to the fees quoted below.

Incorporations New Canada Company

• $299.00 plus disbursements
• $699.00) inclusive of all government filing fees

For this low amount, we will incorporate a new numbered Canada company for you within two business days. If you decide to name your new company, there is an additional cost of $99.00 

Incorporations - New Ontario Company

• $299.00 plus disbursements
• $799.00 inclusive of all government filing fees

For this low amount, we will incorporate a new numbered Ontario company for you within five business days. If you decide to name your new company, there is an additional cost of $99.00.

Incorporations & Organizations - New Company (Canada or Ontario)

• $999.00 (includes all disbursements)
  • For companies with one shareholder. The fee to add additional shareholders is $100.00 per person

  For this amount, we will do the following:

  • one of our business lawyers will meet with you to discuss your business venture and answer any questions you might have regarding the incorporation process
  • incorporate a new Canada or Ontario company by drafting & filing the Articles of Incorporation
  • file all relevant forms with both the Federal and/or Ontario government
  • organize the new company which includes:
    • drafting the company's bylaws
    • drafting all necessary corporate resolutions
    • issuing shares
    • preparing all corporate registries

  This price includes all disbursements such as:

  • government filing fees including incorporation fees
  • cost of minute book, seal (if required), share certificates
  • NUANS search (if required)

Multi-Incorporations (Canada or Ontario Incorporation)

• 15% discount on the above prices

Incorporation & Purchase of a Business

• 10% discount on the above prices (the incorporation must occur at the same time as the purchase of the business)

Incorporations - Offshore Companies

• 10% discount on the above prices if an offshore company is incorporated at the same time

Contact: for incorporation matters, please send an email to info@heydary.com or contact one of our Toronto lawyers or Javad Heydary.

*The above prices for incorporation are only for Ontario and Canada incorporations and are subject to change without notice and also subject to conditions.

Additional Information

For a detailed discussion of the legal aspects of a corporation, please see the article below:

The Fundamentals of Corporate Law

By Javad Heydary & Christopher J. Zaleski

Print Version

The Corporation

One of the most common ways to operate a business today is through a corporation. It is difficult to contemplate the functioning of our economy without the corporation or a reliable system of corporate law.

Operating a business without a corporation, most commonly through a sole proprietorship or a partnership, involves personal responsibility for all the debts, liabilities and obligations of the business. Comparatively, a corporation provides the distinguishing feature of limited liability for its owners and managers because it is considered a separate legal person. The main components of the corporation include shareholders who own the corporation, directors and officers who manage and supervise the corporation, and in many cases, non-executive employees who work for the corporation. Since corporations are not human persons but have rights and obligations that are similar, shareholders elect directors who are authorized to act on the corporation's behalf.

Why Incorporate?

The advantages of incorporating a business are tied in to the corporation's separate legal personality and limited liability. Some of the advantages include:

• Limiting the liability of shareholders for the debts, obligations and liabilities of the corporation to the amount of their initial investment to purchase shares in the corporation. In contrast, a sole proprietor or a partner could potentially lose personal assets beyond those invested in the business.
• It is possible to separate the owners, directors and employees of the business within a corporation, whereas a sole proprietor is the owner and manager of the business, and cannot be his or her own employee.
• A corporation allows the business to attract and motivate employees and management by allowing for partial ownership of the corporation.
• Rates of taxation within the corporation are generally lower than personal rates.
• It is possible for a corporation to merge or amalgamate with another corporation.
• Corporations also have perpetual existence which means that shareholders, officers and directors can come and go without affecting the distinct legal personality of the corporation.

Charitable organizations often incorporate as not-for-profit corporations to enjoy similar advantages. Some of the disadvantages of incorporation include the initial higher cost of incorporating a business relative to the lower cost of starting a sole proprietorship or a partnership. There are also on-going costs associated with annual filings, tax and record keeping requirements. Many businesses are willing to bear these costs in order to have the advantages of limited liability and separate personality.

Taxes

As to tax consequences, receiving income through a corporation could have negative tax implications for a business owner. However, on the other hand, a corporation can assist a business owner by providing him/her with effective tax planning measures, which can be utilized for purposes such as tax deferral.

Components of the Corporation

Jurisdiction

Just as a human person can be a citizen of a particular country, corporations must belong to a particular jurisdiction. In Canada, this means that a corporation may be incorporated provincially or federally. A corporation must comply with the laws of the jurisdiction where it was incorporated, in addition to the laws of any jurisdiction where it conducts business.

A federally incorporated corporation may conduct business anywhere in Canada, so long as it is also registered in the province or jurisdiction where it conducts business. For example, a federally incorporated corporation may conduct business in Ontario upon filing the appropriate provincial form. Traditionally, federal incorporation has been appropriate for businesses that conduct business in several provinces in Canada. A corporation incorporated under the laws of Ontario may conduct business in another province upon filing the required forms and paying the appropriate fees. It may conduct business in Quebec without these requirements. Corporations may "move" from one jurisdiction to another upon following the appropriate procedures.

Articles of Incorporation

Articles of Incorporation serve as the corporation's constitution and "birth certificate". The corporation is created by filing Articles of Incorporation with the appropriate governmental authority. In Ontario, Articles of Incorporation are filed with the Companies and Personal Property Security Branch of the Ministry of Consumer and Business Services, while federal Articles of Incorporation are filed with Corporations Canada branch of Industry Canada. The appropriate fee must be paid and the Articles of Incorporation must conform to the requirements and form used within the jurisdiction.

The Articles of Incorporation contain information as to where the registered office of the corporation is located, the share structure of the corporation, the rights, privileges and conditions attached to each class of shares, the number of corporate directors and the restrictions, if any, on the type of business conducted by the corporation and on the transfer of shares.

Name of the Corporation

A corporation always has a number name assigned to it at the time its Articles of Incorporation are filed. In the absence of a corporate name, that number will act as the company's name. Such corporations are often referred to as numbered companies. For example a numbered company incorporated provincially in Ontario might be named 1987654 Ontario Limited, while a federally incorporated company might be named 7999123 Canada Incorporated.

Alternatively, a corporation may apply for a name, in which case a current name search report (NUANS search) must be filed along with the Articles of Incorporation. The report contains information on names and trade-marks that are similar to the proposed name of the corporation. A corporation can not have a name that is identical to or confusingly similar with an existing name or trade-mark. The NUANS report does not guarantee that a corporate name will not be attacked at some future date for violating a trade-mark and/or for not complying with the statutory rules. In addition, names should not inaccurately describe the business of the corporation or contain offensive terminology or terms prohibited by the relevant legislation and regulations. Corporate names are also required to have a term that differentiates the corporation from partnerships and sole proprietorships. This is achieved by the insertion of a limiting term at the end of the name, usually "Incorporated, Limited, Inc., Ltd. or Limited".

Organization of the Corporation

After a corporation has been incorporated, it should be properly organized. Normally this is achieved by: issuing shares to the initial shareholders; electing the initial directors; appointing the initial officers; approving the By-law(s), and filing the initial notices advising the appropriate governmental authority of newly elected directors and officers.

Share Structure of the Corporation

A corporation must have at least one class of shares. The nature of the share structure should mirror the complexities of the capitalization of the corporation. Simple capitalizations usually have one or two classes of shares, whereas complex capitalizations may require several classes of shares.

Usually "Common" shares are a class of shares to which the principal right to vote at meetings of shareholders is attached. "Preference" or "Preferred" shares usually have no voting rights, but have preference regarding, among other things, the payments of dividends and/or the division of assets of the corporation in the event that the corporation is dissolved. As result of statutory provisions or if the shares are "Convertible" non-voting shares, under certain circumstances, such non-voting shares are given the right to vote, such as on an amalgamation of the corporation or the sale of substantially all of the assets of the corporation. "Convertible" shares are shares that may be changed from one class of shares into another class in certain circumstances.

The Articles of Incorporation may limit the number of shares that may be issued in a class or provide that an unlimited number of shares may be issued. Shares of a class may also be issued in series. The different classes of shares of a corporation must have among them the right to vote at meetings and the right to the assets of the corporation upon its dissolution, although these rights do not have to be concentrated in one class of shares.

The Shareholders of the Corporation

Shareholders are the owners of the corporation. Their ownership is evidenced by share certificates. A corporation may be owned by one or several shareholders. Shareholders do not own the assets of the corporation, rather, the assets are owned by the corporation. Accordingly, shareholders do not own the debts of the corporation, nor are they responsible for the debts of the corporation. As previously mentioned and subject to minor exceptions, the maximum amount that a shareholder can lose in an unsuccessful business operated through a corporation is the amount of their initial investment in purchasing their shares.

Shareholders do not manage the corporation. Voting shareholders elect directors who are responsible for the overall oversight of the corporation through the appointment of officers and the making of major decisions relating to the corporation's operations. Shareholders without voting rights do not elect the directors of the corporation.

Generally, all shareholders have the right to vote at meetings of the shareholders in circumstances where there is a fundamental change to the corporation, such as when the Articles of Incorporation are being amended or all or substantially all of the assets of the corporation are being sold.

The Directors of the Corporation

Directors are obligated by law to manage the corporation on behalf of shareholders in good faith and in the best interests of the corporation. A corporation incorporated federally or provincially in Ontario must have at least one director who is a "Resident Canadian", over 18 years of age, and not a bankrupt. In Ontario, a majority of directors must be Resident Canadian, whereas only 25% of the directors of a federal company need to be Resident Canadian.

Directors are elected by a simple majority of the shareholders unless the Articles of Incorporation or a unanimous shareholders' agreement (USA) provides otherwise. Directors control the selection of the officers who manage the corporation. Directors also define the scope of the responsibility of officers. Directors are commonly involved in major corporate decisions such as forming the business plan, making decisions about selling or issuing shares, assuming debts and liabilities, allocating corporate profits and paying dividends to shareholders.

In making such decisions, directors can either hold meetings as long as a sufficient number of directors are present (called a quorum determined by the corporate by-law and/or USA). Alternatively, resolutions agreed to in writing must be signed by all the directors. Often a chairperson is elected to lead meetings of directors.

Notwithstanding the separate legal personality of the corporation, the law in Canada imposes significant potential liability on directors of corporations. Some of these liabilities include: liability for director's failing to comply with their fiduciary obligation to act in the best interest of the corporation including obligations to avoid conflicts of interest; liability for the corporation's failure to remit Goods and Services Tax as appropriate; liability for the corporation's failure to remit employee Income Tax source deductions as required; liability for unpaid wages including vacation pay up to a certain period; and liability for environmental damage caused by the corporation's activities. As a director, it would be wise to monitor and supervise the corporation's affairs to avoid personal liability.

The manner in which directors manage a corporation's affairs may be governed by the terms of a USA and by By-laws to the extent permitted by law.

The Officers of the Corporation

The directors of the corporation appoint the officers of the corporation and may delegate certain powers to them to manage the affairs of the corporation, subject to the terms of the Articles of Incorporation, the By-laws or a USA. Officers are subject to the same duties as directors to act in good faith and in the best interests of the corporation and to avoid conflicts of interest.

The more common officers appointed include, President, Treasurer and Secretary. Treasurers usually record the issuance of shares, while secretaries maintain the corporate records of the corporation. Other officers include, Vice President, Chief Executive Officer, Chief Financial Officer and Chief Technology Officer. One person may hold several offices of a corporation simultaneously.

The By-Laws of the Corporation

While not mandatory, by-laws are almost always enacted by directors and approved by shareholders to provide for matters of a continuing nature relating to the operation of the corporation. Normally a By-law Number 1 is enacted during the initial organization of the corporation, which by-law would cover the procedure for meetings, including location, notices and quorum requirements and provision for proxies. By-laws may also delineate responsibility of officers and determine who may sign documents on behalf of the corporation.

Corporate Maintenance

Filing Requirements

The filing requirements for a corporation will vary depending on the jurisdiction used to incorporate. For example, apart from regular annual filings, an Ontario corporation will have to file a Form 1 - Initial Return/Notice of Change within 60 days of the date of incorporation. The form contains the location of the registered office of the corporation in addition to the identity and addresses of the directors and officers. The same form must be filed within 15 days of a change to any of the information concerning the registered office, officers and directors of the corporation.

Maintenance of Corporate Records

A corporation's life is reflected through its documents such as directors' resolutions and minutes of shareholders meetings. Usually, these documents are placed in the company's minute book, which is often maintained by the corporation's solicitors on an ongoing basis.

Conclusion

Notwithstanding the fact that your company's lawyers will most likely look after all your corporation's legal requirements, it is wise to be familiar with the legal setup of a corporation as discussed above if you are involved in a company in a significant capacity such as a shareholder, director and/or officer.

Contacts: for incorporation matters, please send an email to info@heydary.com or contact one of our Toronto business lawyers , Sandy Yeung or Javad Heydary.

*The above prices for incorporation are only for Ontario and Canada incorporations and are subject to change without notice and also subject to conditions.