Glossary of Terms | New Business Now

Annual Return

A document required to be filed in the jurisdiction of incorporation once per year which confirms basic information about the structure of a Corporation.

Articles of Amendment

A document filed with the appropriate government agency subsequent to articles of incorporation which amends the provisions of the articles of incorporation.

Articles of Incorporation

A document filed with the appropriate government agency on the incorporation of a business.

Branch

An office that is a registered extension or division of a corporation’s business.

Business Corporations Act (Alberta)

The Act which sets out the legal and regulatory framework for all businesses incorporated in the Province of Alberta.

Business Corporations Act (British Columbia)

The Act which sets out the legal and regulatory framework for all businesses incorporated in the Province of British Columbia.

Business Name

The name used by a business to identify itself to the general public. A corporation's Business Name may differ from its registered corporate name if the required government registrations are completed.

Business Number (BN)

An account number issued by the Canada Revenue Agency to businesses in Canada for the purposes of federal corporate income tax, import/export accounts, GST/HST collection and remittance & payroll source deductions for employees.

Business Structure

A legally recognized organizational framework for conducting business including, but not limited to, a sole proprietorship, general or limited partnership or corporation.

By-laws

Regulations adopted by a corporation for its internal governance. By-laws often deal with matters such as directors and shareholders meetings, the responsibilities of officers and signing authority on behalf of the corporation.

Canada Business Corporations Act (CBCA)

The Act which sets out the legal and regulatory framework for all federally incorporated businesses in Canada.

Canada Revenue Agency (CRA)

An agency of the Canadian federal government responsible for collecting income tax (personal and corporate), import/export duties, excise taxes, Goods and Services Tax/Harmonized Sales Tax as well as for regulating registered charities.

Canadian Controlled Private Corporation (CCPC)

A corporation which receives preferential tax treatment under the Income Tax Act. These corporations generally qualify for the small business deduction which results in a lower tax rate on a specified amount of active business income.

Capital Gains Exemption

Profits made on the sale of a fixed asset or business that are exempt from taxes up to a specified amount.

CIDREQ Search

Acronym for Centre Informatique du Registre des Entreprises du Québec. A CIDREQ search is used for incorporation and business registration purposes in the Province of Québec. It compares a proposed new corporate or business name with existing business names and corporate names in Québec to ensure that no confusingly similar names are in use. A CIDREQ report must be submitted with the Articles of Incorporation whenever a named corporation is incorporated in Québec.

Continuance

A process whereby a corporation may move from one jurisdiction to another. For example, an Ontario Corporation can file Articles of Continuance to change its jurisdiction from Ontario to the federal jurisdiction.

Copyright

An exclusive right to copy an original work. Copyright only permits certain individuals the right to reproduce an original work.

Corporate Identifier

The legal element of an incorporated business name which indicates its limited liability status, and which must appear at the end of the corporate name. Examples: Limited, Ltd., Incorporated, Inc., Corporation, Corp. Also called a “legal identifier”.

Corporate Liability

The liability of a corporation that is enforced by sanctions imposed against the corporation itself.

Corporate Name

The registered name under which the corporation must conduct business. The corporation must do all legal acts, including litigation, under its exact registered corporate name. The corporation may also have one or more separate registered Business Names or Trade Names (also known as fictitious names or "doing business as" names) to identify itself to the public.

Corporations Canada

The branch of Industry Canada that administers the Canada Business Corporations Act. Corporations Canada is the office which receives all federal corporation filings.

Director

An individual elected by the shareholder(s) of a corporation to supervise the corporation's management. The directors of a corporation are collectively referred to as the board of directors. Most Canadian jurisdictions require that a specified percentage of directors are residents of Canada.

Dissolution

The act of terminating the legal existence of a corporation. Dissolution may be voluntary or involuntary.

Dividend

The distribution of current or accumulated earnings of a corporation to its shareholders based on the number of shares owned.

Double Taxation

A situation in which corporate income is taxed twice: once when it is earned by the corporation and a second time at the personal level when it is removed from the corporation as a dividend.

Due Diligence

The care or diligence that a prudent, reasonable person is expected to exercise in the evaluation of risks and the performance of duties that might affect a business’ operations or comportment. In the event of liability or prosecution, due diligence may provide an acceptable defence.

Equity Capital

Capital raised by a corporation through the issuance and selling of shares.

Extra-Provincial Corporation

A corporation registered in one Province which carries on business in another Province (ie. opens a permanent office or hires an employee) can register in the second Province as an extra-provincial corporation.

Extra-Provincial Licence/Registration

Registration that allows a corporation registered in one jurisdiction to operate in another.

Family Trust

A Family Trust is a discretionary trust set up to hold a family's assets or to conduct a family business. Generally, family trusts are established for asset protection or tax planning purposes.

Federal Incorporation

Incorporation under the Canada Business Corporations Act. Federal Corporations, otherwise known as Canada Corporations have the constitutional right to carry on business under their registered corporate name within any Canadian Province or Territory, subject to any provincial or territorial requirements. This type of corporation can therefore operate across Canada under its own corporate name.

Federal Jurisdiction

The areas of law in which the federal government has control as defined by the Constitution Act.

Fiscal Year

A corporation's accounting year. A period of twelve consecutive months chosen by a business as the accounting period for its annual reports.

General Partnership

A General Partnership is an association of two or more people (individuals or corporations) carrying on business for the purpose of earning a profit. In a general partnership the partners share in the operation of the business and they are jointly and severally liable for the debts and obligations of the partnership.

Guarantee (Guaranty)

A legally enforceable promise to become liable for the debt of another. Most bank loans to corporations are backed by the personal guarantee of the shareholders of the corporation. If the corporation defaults on the debt, the shareholders are then personally liable to pay the debt on behalf of the corporation.

Holding Company

A company that limits its activities to owning stock in, and supervising management of other companies.

Holding Company

A corporation which is used to hold the shares of other companies, rather than conduct active business operations. Holding companies are normally used for asset protection and tax planning purposes.

Income Splitting

Income splitting is a strategy of shifting income from a higher income earner to a lower income earner in order to reduce the overall tax paid by the family.

Incorporation (Incorporate)

The act of forming or creating a corporation by filing the required documents.

Incorporator

A person who joins with others to form a corporation. The person or persons who sign the articles of incorporation.

Indemnity

Compensation for loss; a promise to pay for costs incurred by a person on the occurrence of an anticipated loss.

Joint & Several Liability

A concept of liabillity in which two or more persons are each fully responsible for their own obligations, as well as for the obligations of the others. In a general partnership each partner has joint and several liability in respect of the partnership's debts and other obligations.

Jurisdiction

A specific geographic area in which a particular court or government has authority.

Legal Identifier

The legal element of an incorporated business name which indicates its limited liability status, and which must appear at the end of the corporate name. Examples: Limited, Ltd., Incorporated, Inc., Corporation, Corp. Also called a “corporate identifier”.

Legal Liability

A legal liability is a legal obligation of a person or business entity to pay a debt or other obligation.

Limited Liability

Limited liability is a legal concept whereby a person\'s financial liability is limited to a fixed sum, most commonly the value of a person\'s investment in a corporation or partnership with limited liability.

Limited Partnership

A partnership made up of one or more general partners who manage the business and are personally liable for its debts, and one or more limited partners who contribute capital and share in the profits, but who take no part in running the business and have no liability with regard to partnership debts beyond their capital investment.

Minute Book (Corporate Minute Book)

A binder or book containing corporate records, documents, registers and resolutions of the corporation. All corporations must maintain an up-to-date minute book pursuant to statute.

Name Granting Guidelines

Guidelines used by the government in determining the availability of proposed corporate names for incorporation and/or business registration.

New Brunswick - Business Corporations Act

The Act which sets out the legal and regulatory framework for all businesses incorporated in the Province of New Brunswick.

New West Partnership Trade Agreement

An agreement between the Provinces of British Columbia, Alberta and Saskatchewan which simplifies, and in some cases eliminates, extra-provincial registration requirements for companies incorporated in each Province who wish to operate extra-provincially in the other Provinces.

Newfoundland Corporations Act

The Act which sets out the legal and regulatory framework for all businesses incorporated in the Province of Newfoundland and Labrador.

Nova Scotia Companies Act

The Act which sets out the legal and regulatory framework for all businesses incorporated in the Province of Nova Scotia.

NUANS Name Search Report

Acronym for Newly Upgraded Automated Name Search. A NUANS search compares a proposed new corporate name with existing business names, corporate names and trademarks to ensure that no confusingly similar names are in use in the jurisdiction. A NUANS report must be submitted with the Articles of Incorporation whenever a named corporation is incorporated.

Numbered Company (Numbered Corporation)

A corporation which uses a number rather than a distinct corporate name. A numbered company's corporate number is assigned to it by the jurisdiction of incorporation. Many corporations have numbered names where using a distinct corporate name is not important.

Officer

An individual appointed by the director(s) of a corporation to manage the daily affairs of the company. Officers use varied titles such as President, Vice-President, Treasurer, Secretary, CEO, CFO, etc. Although officer positions are distinct from that of director, officers can also hold the position of director.

Ontario Business Corporations Act (OBCA)

The Act which sets out the legal and regulatory framework for all businesses incorporated in the Province of Ontario.

Organizational Minutes (Organizational Resolutions)

The initial resolutions of shareholders and directors which set up the corporation's structure. Organizational minutes typically allow for the issuance of shares to shareholders, appoint directors and officers and approve the by-laws of the corporation.

Partnership

A business owned by two or more persons that is not organized as a corporation. A partnership is defined as a "relationship that subsists between persons carrying on business in common with a view to profit."

Partnership Agreement

A legal document that outlines the individual and joint obligations of all partners in a partnership.

Patent

A grant of a right to exclude others from making, using or selling one's invention which includes the right to license others to make, use or sell the invention.

Personal Guarantee

A legally enforceable promise to become liable for the debt of another. Most bank loans to corporations are backed by the personal guarantee of the shareholders of the corporation. If the corporation defaults on the debt, the shareholders are then personally liable to pay the debt on behalf of the corporation.

Prince Edward Island - Companies Act

The Act which sets out the legal and regulatory framework for all businesses incorporated in the Province of Prince Edward Island.

Private Company (Private Corporation)

A company that does not sell its shares to the general public. The transfer (sale) of shares in such a company is usually restricted in some way, such as by the requirement that the directors or shareholders of the corporation must approve any transfer of shares in advance of the sale.

Provincial Incorporation

Incorporation under the corporate statute of a particular province.

Provincial Jurisdiction

The areas of law in which the provincial and/or territorial governments have control as defined by the Constitution Act.

Quebec - Corporations Act

The Act which sets out the legal and regulatory framework for all businesses incorporated in the Province of Quebec.

Quorum

The fixed minimum number of people entitled to attend a meeting who must be present for business to be conducted. Corporate by-laws may specify the minimum number of directors who must be present at a meeting of the board of directors or the minimum number of shareholders who must be present at a shareholders' meeting. If the by-laws do not set out the rules for a quorum, they are normally set out in corporate legislation.

Registered Office

The address to which all corporate documents are sent. A provincially incorporated business must have its registered office within the province of incorporation. A federally incorporated business must have its registered office within Canada. The address of the registered office does not have to be the actual place of business but it normally cannot be a post office box.

Resolution

A statement of a decision reached by either the shareholders or directors of a corporation. A resolution may be written if all parties agree and sign it, or it may be made orally in a meeting on the basis of a number of votes cast and then recorded in the meeting's minutes. An ordinary resolution is one passes by a majority of votes, and a special resolution is one passed by a majority of a minimum two-thirds of the votes cast.

Seal (Corporate Seal)

A seal adopted and used by a corporation for authenticating its corporate acts and executing legal documents. Corporate seals are no longer required by many corporate statutes but are still a useful tool for authenticating corporate documents.

Share

A unit of stock representing ownership of a corporation. The number of shares owned by a particular shareholder are normally represented by a share certificate.

Share Certificate

A corporate document which certifies that the person named on the certificate is entitled to ownership of a certain number of shares of the corporation.

Share Subscription

The act of a shareholder acquiring shares of a corporation.

Shareholder

A person who owns shares of a corporation. Shareholders are the owners of corporations.

Shareholder Agreement

A contract between all or a portion of the shareholders of a corporation, which sets out their mutual rights and obligations.

Signing Officer

An officer of the corporation who is authorized to sign documents on behalf of the corporation, and who can legally bind the corporation.

Sole Proprietorship

A business in which one person owns all assets and is personally responsible for all liabilities.

Stock

A unit of stock representing ownership of a corporation. The amound of stock owned by a particular shareholder are normally represented by a stock or share certificate.

Subsidiary

A corporation whose shares are majority owned by a related parent (holding)corporation.

The Business Corporations Act (Saskatchewan)

The Act which sets out the legal and regulatory framework for all businesses incorporated in the Province of Saskatchewan.

The Corporations Act (Manitoba)

The Act which sets out the legal and regulatory framework for all businesses incorporated in the Province of Manitoba.

Trade Name (Trade Style)

The name used by a business to identify itself to the general public. A corporation's Trade Name may differ from its registered corporate name if the required government registrations are completed.

Trademark

A mark which distinguishes goods or services from those of other businesses.

Unlimited Liability

A type of investment in which a partner or investor can lose an unlimited amount of money

Winding Up

The process of settling the accounts and liquidating the assets of a corporation for the purpose of distributing the net assets to shareholders and dissolving the corporation.