Difference between revisions of "Incorporating a Company"

Other ways to form a business, apart from a company

To learn more on whether you want to incorporate a company, check Script 265 on “Starting a Small Business”. Other options are a sole proprietorship and a partnership. Also, before incorporating, you may want to get advice from a lawyer and an accountant. They can help you decide the best way to set up the company’s authorized share structure (explained later) and structure the company for optimal tax planning.  

Two types of companies under BC Business Corporations Act

Under BC’s Business Corporations Act, there are public companies and private companies.  

Decide on a name for your company

The name must end in “Limited,” “Ltd.,” “Inc.,” “Incorporated,” “Corp.” or “Corporation,” or the French equivalent to these words. Your new company name needs to be distinctive and have a descriptive element, or you can choose a numbered BC company name. The Corporate Registry has more information on choosing a name. If you decide to carry on business under a trade name, you must display the full legal name of your company on certain documents like contracts and invoices.

Reserve the company name with the Corporate Registry

The easiest way is to reserve online. If the name you want is available, it will be reserved for 56 days.  

Decide who will be involved in your company  

The shareholders own the company and vote to appoint the directors. The directors control the company and oversee how it is run. They may appoint officers, such as a president or secretary. Typically, the officers handle the daily operations of the company and are overseen by the directors. You can have a one-person company and be the sole shareholder, director and officer.

Shareholders

Requirements for directors

• A private company must have at least one director.  

• A director doesn’t have to live in BC or Canada, but they do have to consent in writing to act as a director.  

• A director must provide the Corporate Registry with an address where they can receive documents during standard business hours. If there’s no such office, then the Registry requires the director’s home address.  

• A director must be at least 18 years old and cannot have certain criminal convictions, be a bankrupt person (who hasn’t yet been granted formal discharge from bankruptcy) or have been found by a court to be incapable of managing their own affairs.

Registered and records office

Authorized share structure

There are two main kinds of shares: par value shares and shares without par value. Par value shares have a minimum price they can be sold for. Shares without par value don’t have a minimum price. You can also have different classes of shares with different attributes and rights, such as common shares and preferred shares, voting rights, the right to receive dividends, plus different series of shares within a class of shares. The specifics can be complicated, so get advice from a lawyer or accountant.  

Required incorporation documents that must be prepared

• an Incorporation Agreement

• the Incorporation Application

• the Articles

• the Notice of Articles

Incorporation Agreement—this is an agreement between the incorporator (or incorporators) and the company. It describes the number, kind and class of shares each incorporator agrees to take once the company is incorporated. The incorporator must agree to take at least one share of the company and therefore become the company’s first shareholder. The Incorporation Agreement must be signed by the incorporator before submitting the Incorporation Application to the Corporate Registry. You don’t submit the Incorporation Agreement itself to the Corporate Registry, but a signed original should be placed in the company’s records book.