10 Steps to Creating a Corporation

1. Select Corporate Jurisdiction
2. Select Corporate Name
3. Determine Corporate Name Availability
4. Complete Articles of Incorporation
5. Submit & Register Articles of Incorporation
6. Purchase Corporate Seal & Minute Book
7. Complete Corporate By-Laws, Organizational Minutes & Issue Shares
8. Obtain Other Permits & Licenses
9. Set Up Bank Account
10. Start Your Business!

While this list is intended to describe the basic steps required to create a corporation, readers should be aware that it is not exhaustive, and that certain steps may be performed simultaneously.

1. Select Corporate Jurisdiction

In Canada, incorporators can choose to incorporate in one of 13 provincial and territorial jurisdictions or one federal jurisdiction of incorporation.  In most cases, the choice of jurisdiction is limited to either the home province/territory of the incorporator or to federal jurisdiction.

Federal (Canada) corporations are incorporated pursuant to the Canada Business Corporations Act and have the ability to carry on business anywhere in Canada under their registered corporate name, subject to extra-provincial registration requirements in each province or territory.  Provincial corporations are incorporated pursuant to the applicable provincial corporate statute, and only have the right to carry on business within the province or territory of incorporation.  (i.e. an Ontario Corporation can only carry on business within the Province of Ontario).  Provincial corporations can however make an extra-provincial registration to carry on business in another province or provinces (i.e. if an Ontario corporation wants to set up offices in Alberta it could apply to the Province of Alberta for registration as an extra-provincial corporation in Alberta).

Provincial incorporation provides corporate name protection only within the province or territory of incorporation.  As a result, if an individual incorporates "123 Corporation" in Ontario, another person could incorporate "123 Corporation" in British Columbia at a later date.  If you are only intending on operating your corporation within one province or territory, this should not be an issue for you to worry about.  If you intend to incorporate provincially and then register the corporation extra-provincially in another province or territory at a later date, you may be disappointed to find out that your corporate name, or a similar one, has already been registered in the other province and you will have to choose a new name for the other province.  In this circumstance, federal incorporation may be a better option.

Another difference between federal and provincial corporations is the cost of incorporation.  Federally incorporated companies must be incorporated at the federal level and then be registered extra-provincially in one or more Provinces.  As a result, the overall cost of incorporation is usually higher for federal incorporation, as both federal and provincial filing fees will apply.  The only exception is for federal corporations which are located in the Province of Ontario.  Ontario does not charge any extra-provincial filing fees for federally incorporated companies, and therefore, the cost to incorporate federally is actually lower than Provincial incorporation in Ontario.

In deciding which jurisdiction in which to register, prospective incorporators should ask themselves the following questions:

• Where will the corporation carry on business?  In one or more provinces, or across Canada?
• Is federal name protection important for the business?  Will the corporate name be used in other provinces or territories?
• Is the corporate name unique enough to justify protecting it with federal incorporation?
• Will you decide to incorporate additional companies in the future?  If so, it is generally recommended to incorporate these new companies in the same jurisdiction as the first corporation, so that future corporate changes can be made cheaply and easily.

For a table listing the differences between Federal and Provincial Corporations, click here.

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2. Select Corporate Name

Selecting a corporate name can be the most difficult part of incorporating a company.  Although there are no mandatory requirements to choose a particular name, each jurisdiction has its own set of guidelines and requirements for corporate name approval.

As mentioned in the last section on jurisdiction, the name granting guidelines used by Corporations Canada are the most stringent of any jurisdiction in Canada. In most cases, Corporations Canada will require all proposed names to consist of distinctive and descriptive elements.  The distinctive element identifies the particular corporation, while the descriptive elements identifies the particular activities of the corporation.  As a general rule, for federal corporations, if the distinctive portion of the name consists solely of individual letters, or an acronym, a minimum of four to five letters must be used.  Many proposed corporate names are rejected after much time, energy and money has been spent in attempting to have them approved.  As a result, it is advisable for all federal incorporators to choose a minimum of three alternate names in advance, so that if their first choices are rejected, they have an alternate names to submit.

Corporate names can either be created by the incorporator, or they can be the corporate number assigned to the corporation by the incorporating jurisdiction (i.e. 123456 Ontario Inc.).  A numbered corporation is a good choice when a fast and relatively inexpensive incorporation is required.  In this situation, the corporation may be created using a numbered name and Articles of Amendment may be filed later to change the name.  Alternatively, a numbered corporation may be used where the incorporator will operate the business under another business name registered to the corporation (i.e. 123456 Ontario Inc. doing business as (d.b.a.) Fantasy Baseball Camp).

The following general rules apply to any proposed corporate name:

• Under the laws of most jurisdictions, the incorporator is responsible for ensuring that the chosen corporate name complies with the applicable law in that jurisdiction.
• Corporate names must generally not be the same or similar to that of any other existing business name or trademark, if the use of the proposed name would be likely to deceive the general public.
• Corporate names can be in either English, French, in both English and French, or in a combined English and French form.
• Corporate names usually consist of a distinctive element and a descriptive element.
• Corporate names must end with a legal element consisting of one of the following:

Limited (Ltd.), Incorporated (Inc.), Corporation (Corp.), Limitée (Ltée.), Incorporée (Inc.)

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3. Determine Corporate Name Availability

Before submitting a proposed corporate name to the government for approval, the name must be searched using either the Newly Upgraded Automated Name Search ("NUANS®") system or the Centre Informatique du Registre des Entreprises du Québec ("CIDREQ") system.  Certain Provinces allow incorporators to purchase these searches from private Search Houses (such as New Business Now.com), while others require that they be purchased directly from the relevant government authority as a Name Reservation. 

Results of the name search/reservation must be submitted with the Articles of Incorporation (unless you are incorporating a numbered company in which case a name search/reservation is not generally required) to demonstrate that there are no identical or deceptively similar names already registered in the jurisdiction.  These reports typically include registered business (sole proprietorship & partnership) names, corporate names and trade marks similar to the proposed name.

Specific types of NUANS® searches are completed depending on the desired jurisdiction of incorporation.  For federal incorporation, a "Canada-biased" NUANS® report is required.  For an Ontario incorporation, an "Ontario biased" NUANS® report must be obtained.  For incorporation in any of New Brunswick, Nova Scotia or Prince Edward Island, an "Atlantic biased" NUANS® report is required.  If it is likely that in the future a corporation will apply to carry on business in a jurisdiction other than the jurisdiction of incorporation, it is recommended that a NUANS® report for the other jurisdiction be obtained as well, so that the incorporator has advanced knowledge of any potential problems with the proposed name.

For federal incorporation, Corporations Canada offers a name pre-clearance service.  If an incorporator is unsure of the suitability of a particular name, he or she may forward a NUANS® report for that name to Corporations Canada in advance of filing the Articles of Incorporation for a name decision.  If the proposed name is accepted, it is reserved while the Articles of Incorporation are prepared (the federal name reservation lasts for a maximum of ninety days).  If the name is not accepted, the incorporator has saved the time and effort of submitting useless Articles of Incorporation and he or she can submit a new name or provide additional information to Corporations Canada in order to gain acceptance for the proposed name. 

Click here to purchase a NUANS® Search, CIDREQ Search or Name Reservation report directly from New Business Now.com  

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4. Complete Articles of Incorporation

In most Canadian jurisdictions, business corporations are created by filing articles of incorporation with the appropriate government agency.

Before completing articles of incorporation, Incorporators will have to make basic decisions about their corporation as follows:

• Where will the registered office be located?
• How many and what classes of shares will the company be authorized to issue? 
• Should there be restrictions on share transfers to ensure that the corporation remains "private?"
• How many directors will be appointed?  Will there be a set number of directors or a minimum and maximum number?
• Should there be restrictions on the types of activities or type of business that the corporation may conduct?
• Are there any other restrictions or clauses that should be included in the articles?

Answers to the questions listed above vary according to the specific requirements of each individual's situtation.  As a result, specific legal and/or tax advice should be obtained by the incorporator prior to completing the articles of incorporation.

Once the articles of incorporation and supporting documents are completed, they must be signed in duplicate by at least one incorporator who is competent, at least 18 years of age and not bankrupt.  In most cases, incorporators may, but do not have to be directors or shareholders of the company after it is incorporated. 

For more information on using Eric P. Cohen, Barrister & Solicitor to incorporate a company please click here.

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5. Submit & Register Articles of Incorporation

Articles of Incorporation and supporting documents, including the name search and filing fee must be filed with the appropriate government agency before the corporation is created.

For more information on using Eric P. Cohen, Barrister & Solicitor to incorporate a company please click here.

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6. Purchase Corporate Seal & Minute Book

All corporations are required by law to keep certain corporate records including, but not limited to:

• a copy of the Articles of Incorporation
• all corporate by-laws
• minutes of shareholder meetings
• shareholder resolutions
• minutes of directors' meetings
• resolutions of directors
• directors register
• securities register
• share transfer register
• a copy of any forms filed with the government
• a copy of any unanimous shareholder agreement

All of these documents are usually kept in a binder or case known as a corporate minute book.  Although there is no specific type of minute book required (incorporators can use a simple binder if they choose), it is useful to have a professional minute book prepared and updated each year to reflect the ongoing business of the corporation.  A professionally updated minute book allows for quick organized reference to corporate documents, and is extremely important in a variety of corporate transactions, such as the sale of the corporation to another shareholder (the purchaser's lawyer will usually want to examine the corporate minute book in advance of the sale to ensure that all legal requirements have been met by the corporation).

A corporate seal is used to emboss the corporation's name on legal documents.  There is currently no legal requirement for a corporate seal for either federal or Ontario corporations, however, most corporations continue to seal certain legal documents to verify their validity.

Click here to purchase a corporate minute book and/or seal online from New Business Now.com.

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7. Complete By-Laws, Organizational Minutes & Issue Shares (Sign Shareholder Agreement)

After the corporation has been created, its structure must be organized. The organization of the corporation is documented in written form and maintained in the corporate minute book.  The initial organization of the corporation is achieved by a meeting of directors or shareholders of the corporation or by written resolutions signed by all directors or shareholders.  Included in this initial organization are the following:

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8. Obtain Other Permits & Licenses

After you have set up your corporation and are maintaining it according to the legal requirements, you must turn your attention to other legal requirements such as the following:

Remember that there are a variety of industry specific laws and regulations that you must be aware of in order to operate your corporation legally.  Consult a competent lawyer in your Province or Territory for specific legal advice, or click here to contact Eric P. Cohen, an Ontario lawyer.

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9. Set Up Bank Account

In order to set up a corporate bank account, you will need to supply the bank with a copy of your articles of incorporation and any articles of amendment.  All authorised signing officers of the corporation must sign on to the account at the bank before they are permitted to sign cheques or access the corporate account.  The bank may also require certain corporate by-laws or other resolutions to be passed before opening the account.

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10. Start Your Business!

Now that all of the many legal requirements are satisfied, you can concentrate on operating and growing your new business!!

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The information presented in the document above is provided for reference purposes only and is
not intended to be a substitute for the appropriate legal advice of a competent, professional lawyer.
NUANS® and CIDREQMD are registered trademarks/sont des marques déposées of the
Government of Canada/du Gouvernement du Québec respectively.