Incorporating a Company

This script discusses incorporating and maintaining a company.

There are different ways to form a business, other than a company

To learn more on whether you want to incorporate a company, refer to Script 265 on “Starting a Small Business”. Also, before incorporating, you may want to seek 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.

There are basically two types of companies

Under BC’s Business Corporations Act, these are:

• a public company
• a private company

A public company has its shares listed and traded on a stock exchange. A private company is typically a small company with very few shareholders, and its shares aren’t offered for sale to the public. This script only applies to private BC companies.

All private BC companies are incorporated online

Use the Corporate Online services found at www.corporateonline.gov.bc.ca. You can use a credit card to pay for the fees.

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 – seewww.bcregistryservices.gov.bc.ca and click on the “B.C. Companies” link. Note that if you decide to carry on business under a trade name, you have to display the full legal name of your company on certain documents like contracts and invoices.

You must then reserve the name with the Corporate Registry

The easiest way is to reserve online at www.corporateonline.gov.bc.ca. If the name you want to use is available, it will be reserved for 56 days.

Decide who is going to be involved in your company

The shareholders are the owners of the company. The directors have the responsibility and control of the company. They may appoint officers, such as a president or secretary. Typically, the officers handle the day-to-day 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.

Are there any requirements for directors?

Yes. Some of the requirements are:

• 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 own affairs.

The company must have a registered and records office

The registered office for your company is where legal documents can be delivered. The records office is the address where all records for the company are kept. The registered and records offices must be in British Columbia and may be at the same address.

Every company must also have both a mailing address and a delivery address for its registered and records offices. The registered office mailing address is where the company will receive its mail. The registered office delivery address is where the company is given any notices like legal documents. The registered office mailing address may be a post office box, but the registered office delivery address must be a street address that’s accessible to the public during business hours.

You need to decide on an “authorized share structure”

The number of shares your company is authorized to issue to its shareholders is called the authorized share structure. This can be a limited number of shares or an unlimited number.

There are two main kinds of shares: par value shares and shares without par value. Par value shares have a minimum price at which they must be sold. 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, as well as different series of shares within a class of shares. The specifics can be complicated, so professional guidance from your lawyer or accountant is recommended.

To incorporate a company, certain incorporation documents must be prepared

These include:

• an Incorporation Agreement
• the Incorporation Application
• the Articles
• your Notice of Articles

What is the 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.

The Incorporation Application is a document available through Corporate Online

The person who completes the Incorporation Application is called the Completing Party. The Completing Party must ensure that the Incorporation Agreement and Articles are properly prepared and signed by the Incorporator.

The Articles are the rules and regulations for the conduct of your company

You can use the sample set in the Business Corporations Act or have them specially drafted to suit your needs. The Incorporator must sign the Articles of the company. You don’t need to submit the Articles to the Corporate Registry, but you should file a copy in the company’s records book.

What is the Notice of Articles?

The Notice of Articles is a document that contains the following information:

• the company’s name
• the authorized share structure
• whether or not there are special rights and restrictions attached to the shares
• the addresses of the registered and records offices
• the names and residential or business addresses of the directors

How do you submit the incorporation documents to the Corporate Registry?

You must “e-file” or electronically submit your Incorporation Application and attached Notice of Articles to the Corporate Registry, along with the prescribed fee, through Corporate Online. Your company will then be incorporated almost instantly. If you prefer, for an additional fee, you can specify a date and time up to ten days in future for the incorporation of the company.

When you e-file, you’ll have to set up a password (and specify a hint to help you remember the password) for your company so you can submit forms in the future using www.corporateonline.gov.bc.ca. After you e-file, the Corporate Registry will issue a Certificate of Incorporation and send you “certified” or true copies of the Incorporation Application and Notice of Articles.

After incorporating your company, it must be organized

This includes preparing the company’s records book, preparing director and shareholder resolutions, issuing shares, and preparing a directors’ register plus a “central securities register” or share register. You may wish to talk to a lawyer about this. Maintaining a well-organized corporate record book and set of financial statements will help you get a better price when you sell your company and if the Canada Revenue Agency (CRA) decides to audit your company.

How do you maintain your company?

Certain steps must be taken to keep your company alive. Your company must file an annual report with the Corporate Registry each year within two months of its anniversary date of incorporation. Failure to file an annual report for two consecutive years can result in the company being dissolved. Also, if the company changes its registered or records office, or if the directors resign or change their address, the company must e-file other forms with the Corporate Registry. There are fees associated with most of these filings. As well, each year, every BC company must choose to either appoint an auditor or waive the appointing of an auditor.

What about incorporating a federal company?

It’s possible to incorporate a federal company under the Canada Business Corporations Act. A federally incorporated company has the right to carry on business anywhere in the country and will have its name protected across Canada. But a federal incorporation usually takes more time, and the corporation is often more expensive to operate than a BC company.

Alternatively, a BC company can carry on business in other provinces

Your private BC company can do this if it takes steps to register itself extra-provincially in those provinces. But unlike a federally incorporated company, there’s a risk that an extra-provincially registered BC company may have its application to register its name in another province refused by the Registrar of that other province.

How can you protect your company’s brand?

Registration and use of a trademark is the best protection for your company’s name and brand. Refer to Scripts 231 and 264 to learn more about trademark law.

Where can you get help or find more information?

• You can obtain a copy of BC’s Business Corporations Act from any bookstore that sells government publications or download a free copy from www.bclaws.ca.
• Visit the Corporate Registry’s website at www.bcregistryservices.gov.bc.ca/bcreg/corppg/index.page.
• Small Business BC has excellent information on incorporating a company and free guides. Call 604.775.5525 in Vancouver or 1.800.667.2272 elsewhere in the province, or visit www.smallbusinessbc.ca.
• You can also consult your local library, bookstore and Chamber of Commerce for other books and resources on incorporating a company.

[updated October 2014]

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