Limited Corporation Most people will be looking to incorporate a Limited Corporation given the limited liability protection it offers to shareholders. There are, however, circumstances where other types of corporations may be desired.
Professional Corporation A Professional Corporation is a type of corporation that is used for one of the following types of professions: Chartered Professional Accountant, Chiropractor, Dentist, Lawyer, Physician or Optometrist. If the business to be carried on by your corporation falls into one of these professions, you will be looking to incorporate a Professional Corporation.
Unlimited Liability Corporation Unlimited Liability Corporations are special purpose entities which can offer certain tax advantages to a US shareholder when used properly in conjunction with sound tax advice. Unlike Limited Corporations, the liability of each of the shareholders of an Unlimited Liability Corporation for any liability, act or default is unlimited in extent and joint and several in nature. Given the complexities involved (and to the extent you have not already done so) we would strongly recommend that you seek advice from tax advisers on both sides of the border to determine if an Unlimited Liability Corporation is right for you.
The content on this website is provided for general information purposes only and does not constitute legal advice or a legal opinion of any kind. Users of this web site are advised to seek legal advice by contacting Lawnch (or other legal counsel) directly to discuss any specific legal issues.
Lawnch offers incorporations in two jurisdictions, federal and Alberta. There are both advantages and disadvantages to incorporating in each of these jurisdictions.
The main advantage with a federal incorporation revolves around corporate naming rights. Incorporating federally allows you to conduct business across Canada using the same corporate name. The same cannot be said for provincial incorporations. If you were to establish an Alberta corporation, your corporate name protection is limited to operations within Alberta.
Additionally, there are those that consider a federal corporation more prestigious than its provincial counterpart and where status is important (possibly when dealing at an international level), often a federal corporation is preferred for that reason alone.
So why would you choose to incorporate provincially? One reason may be that you are looking to incorporate a Professional Corporation or an Unlimited Liability Corporation. These two special purpose entities are not offered at the federal level. Secondly, depending on the nature of your business, often Alberta corporations are less work and less expensive to operate. The reason being, if you choose to incorporate federally, you must also extra-provincially register your business in any province or territory where you carry on business. This adds an extra layer of cost.
By way of example, let's suppose you incorporate federally for a business you intend to operate in Alberta. You would have to pay the fees to incorporate and maintain your federal corporation AND pay fees associated with extra-provincially registering your federal corporation to carry on business in Alberta. By simply incorporating in Alberta, you only have the costs of incorporating and maintaining your corporation. There is no need to "extra-provincially" register your Alberta corporation in order to carry on business in Alberta.
Unless you intend to operate internationally or you are trying to secure nation-wide name protection, an Alberta corporation may be all you need, especially if you intend to only operate in Alberta. If your business expands to other provinces, you will always be able to extra-provincially register your Alberta corporation in those provinces.
If you are unsure which route (federal vs. Alberta) you want to go, please contact us. If you ultimately choose to incorporate federally and you are looking to extra-provincially register your federal corporation in the province of Alberta, Lawnch can assist on that front as well.
Numbered Corporation If you are not concerned about having a specific name for your corporation, then a numbered corporation may be all you need. By way of example, a numbered corporation incorporated in Alberta would be "123456 Alberta Inc." The numeric portion of the name to be associated with the new corporation is assigned by the relevant governmental authority upon incorporation. "Alberta" always forms the second part of the name for an Alberta corporation, and "Canada" always forms the second part of the name for a federal corporation. You will, however, be able to select the legal element associated with the numbered corporation. The legal element is simply the suffix/ending of a corporation’s name, which is "Inc." in our example.
Named Corporation If you are looking to have a specific name for your corporation, you'll need to understand that a corporation’s name consists of three elements: distinctive, descriptive, and legal. An example would be, "XYZ Plumbing Inc." The distinctive element is a unique word or location that makes your corporation name different from all others. In our example, the distinctive element is "XYZ". A descriptive element describes what the corporation does or what the corporation is. In our example, "Plumbing" is the descriptive element. The legal element is the last part of the corporation name. In our example, "Inc." is the legal element.
All corporations are required to have a legal element. The legal element is simply the suffix/ending of a corporation’s name. When registering a federal or an Alberta corporation, you will have a number of options when it comes to the "legal element" to be used. Other than the distinctions made between Limited Corporations, Unlimited Liability Corporations and Professional Corporations, each of these legal elements are legally identical, so your choice will be a matter of style and preference.
With Unlimited Liability Corporations, the legal element options are few. Every Unlimited Liability Corporation must end in the words "Unlimited Liability Corporation" or the abbreviation "ULC". With Professional Corporations, the corporation must end in the words “Professional Corporation." Words such as "Legal", "Law", "Medical", “Dental” or other professional descriptors may be inserted between the words "Professional" and "Corporation".
To incorporate a named corporation, a NUANS Name Reservation Report will have to be obtained. A NUANS Name Reservation Report is a tool used to determine whether the proposed name is available for use. The report lists similar corporate names and trademarks and will reserve your proposed name for 90 days. If the 90-day period expires, you must order a new report.
Please note that obtaining a NUANS Name Reservation Report does not mean that your proposed name has been approved. It simply means that the name has been reserved for you for 90 days while it is being reviewed for approval.
There is a $50 fee associated with obtaining a NUANS Name Reservation Report. Typically, only one NUANS Name Reservation Report is obtained in the course of incorporating a newly named corporation. The cost of obtaining the first (and hopefully the only) NUANS Name Reservation Report will be added to your flat rate incorporation fee. Prior to obtaining an actual NUANS Name Reservation Report, Lawnch will conduct a Preliminary NUANS Search of the NUANS database free of charge.
While a Preliminary NUANS Search is not conclusive, it will identify instances where there may be naming conflicts with other corporations. By conducting Preliminary NUANS Searches, we will be increasing your chances that your proposed name will ultimately be acceptable once the NUANS Name Reservation Report is obtained. While the Preliminary NUANS Report is a useful tool, unfortunately, there is no guarantee that the proposed name will be available once the NUANS Name Reservation Report is obtained. If the proposed name is ultimately unavailable we will have to start the process over again with an alternative name. There will be an additional $50 fee for each NUANS Name Reservation Report which is ordered. Rest assured, our office will be in touch with you during this process and will not be initiating additional NUANS Name Reservation Reports without your approval. If there are any issues with your proposed name at any point through the naming approval process, we will contact you to discuss your options and a path forward.
A federal corporation must have a Registered Office located within Canada. The Registered Office address cannot be a P.O. Box. All government notices and other documents requiring to be served upon the corporation will be addressed to the registered office. Copies of any such notices or other documents received by Lawnch will be forwarded to you.
The Registered Office is also where is where the corporate records (contained in the corporation's minute book) of the corporation will be kept. Corporate records contained in a minute book include, but are not limited to: articles and bylaws and any amendments thereto, a copy of any unanimous shareholder agreement, minutes of meetings and resolutions of shareholders and directors, government notices, securities registers and financial statements, reports, and information.
You have the option of using Lawnch's office address as the Registered Office address for your corporation free of charge for a period of one year following incorporation. You can choose to continue using EasyCo Law's office address as your corporation's Registered Office following the initial one year period by taking advantage of our annual corporate services package.
An Alberta corporation must have a Registered Office within the Province of Alberta at all times which is accessible to the public during normal business hours.
The Registered Office address cannot be a P.O. Box. All government notices and other documents requiring to be served upon the corporation will be addressed to the registered office. You have the option of using Lawnch's office address as the Registered Office address for your corporation free of charge for a period of one year following incorporation. Copies of any such notices or other documents received by Lawnch will be forwarded to you. You can choose to continue using Lawnch's office address as your corporation's Registered Office following the initial one year period by taking advantage of our annual corporate services package.
The Records Office is where the corporate records (contained in the corporation's minute book) of the corporation are kept. Corporate records contained in a minute book include, but are not limited to: articles and bylaws and any amendments thereto, a copy of any unanimous shareholder agreement, minutes of meetings and resolutions of shareholders and directors, government notices, securities registers and financial statements, reports, and information.
You have the option of using Lawnch's office address as the Records Office address for your corporation free of charge for a period of one year following incorporation. This will entitle you to have virtual online password-protected access to your corporate minute book during that one year period. You can choose to continue using Lawnch's office address as your corporation's Records Office following the initial one year period by taking advantage of our annual corporate services package
Your corporation's Mailing address will be different than the Registered Office address only in circumstances where your corporation will be using a post office address for mail delivery because the corporation's Registered Office address is a legal land description. If your Registered Office address is not not a legal land description, then your corporations "Mailing Address" will simply be the same as the the corporations Registered Office address.
Ownership in the corporation is represented by and divided into shares. Each share class has certain attributes relating to voting rights, dividend rights, and liquidation rights. Your corporation has five separate classes of shares. These five classes should give you some level of flexibility. In the event these five share classes do not meet your needs, please contact us and we can review your situation more specifically.
On incorporation, at a minimum, you'll typically want to issue voting common shares. Unless you are looking to declare dividends on one class of common shares to the exclusion of other share classes, you are looking to issue a class of non-voting shares or there is some other legal or regulatory requirement limiting your ability to issue certain types of shares, you will likely be looking to simply issue Class A Voting Common Shares. If you are incorporating a company that will be providing professional services (including, but not limited to, the legal, accounting, medical, dental, engineering, and architecture fields), you will want to confirm whether or not there are any share ownership restrictions with your applicable professional governing body. In addition, it would be unlikely that you would be looking to issue a class of preferred shares at the incorporation stage.
You will have to set the initial share price payable for the shares to be issued on incorporation. You do not have to set an issue price for the classes of share that are not going to be issued on incorporation at this time. It is not uncommon for shares to be issued for nominal consideration at the time of corporation. Often, the price per share ranges between $0.01 and $1.00 per share.
There are many variables to be considered when establishing the authorized share capital of a corporation and the classes of shares to be issued (and at what price). If you are unsure on how to proceed, we are here to help, contact us.
Primary Contact Person The Primary Contact Person will be the individual authorizing the corporation and with whom Lawnch will be corresponding with on matters concerning the corporation.
Directors The Directors of the corporation will manage, or supervise the management of, the business and affairs of the corporation. At least 25% of the directors of a corporation must be resident Canadians. Certain persons are disqualified from being a Director of a corporation, including anyone who is:
If you are unsure whether or not a proposed Director is a disqualified person, contact us.
Officers Officers are appointed by the Directors of the corporation and are responsible for the management of the business and affairs of the corporation in accordance with the corporation's bylaws and as further specified and delegated by the Directors.
Your corporation's bylaws will specifically provide for the offices of President, Secretary, Treasurer, and Vice President (among others). The directors may also designate other offices of the corporation. For the purposes of forming the corporation, the directors will appoint (at a minimum) a President and a Secretary. The same individual can hold multiple offices at the same time, but no two individuals can hold the same office. For example Bob can be both President and Secretary but Bob and Jim cannot both be President.
You are not required to complete this section, but it would be helpful for the incorporation procedure to know these details.
