You want to run a business and you have decided that incorporation is the best option for you. We have outlined below what you need to know before getting our Incorporation kit.
A corporation, also called a “company”, has its own legal personality. It is a legal person and, just like a natural person, it has rights and obligations. Having a legal personality protects the shareholders of a corporation, as they are, generally speaking, liable for the corporation’s actions only to the extent of their investment. A corporation has its own patrimony, separate from the shareholders’.
In Canada, corporations can be incorporated under provincial law or federal law.
A – Federal incorporation
B – Provincial incorporation (Québec)
When incorporating your company, you’ll have to choose a name. You have two options: a numerical name or a customized name. It is also possible to do business under another name but we’ll get to that later.
A numerical name (Ex: 1234-5678 Québec Inc.) will automatically be attributed by the government to the company who chooses that option. The advantage of choosing such name is that it is much quicker and less costly, as it doesn’t require the verification of the name’s validity.
In Quebec, just like in Canada, a customized name must meet many requirements: not be confusing (with another company or a trademark), not contain unacceptable terms, etc. In Quebec, the chosen customized name must have a French component. If you want a customized name, you may have to produce other documents. If your company is incorporated under federal law, you must submit a NUANS report (dated of no more than 90 days prior to registering) that proves that the chosen name is compliant with the law and that no other business in Canada working in a similar line of business has a similar name. If your company is incorporated under Quebec law, you’ll simply have to declare that you took appropriate measures to ensure that your name is compliant with Quebec law.
You’ll also have to include a suffix to your name. There are many suffixes offered (Ltée., Inc., Corp.) but legally they are all equivalent.
If you want more information regarding customized names or to make sure yours isn’t already taken, consult the website of Quebec’s enterprise Register or Corporation Canada.
The easiest option is to get a numerical name and an alias. Indeed, a corporation with a numerical or a customized name can also do business under another name. That name is called an alias (ex: 1234-5678 Québec Inc. can also do business under the name “À vos chiffres”). To do so, you just need to register the alias with Quebec’s enterprise Register. The use of a suffix with an alias is prohibited, in order to prevent confusion with the company’s name.
It is necessary to identify these positions when you incorporate.
Shareholders are « owners » of the corporation. They are liable to the corporation only to the extent of their investment. Their contribution can be monetary, in assets, in knowledge or in activities. Shareholders elect the directors.
Directors oversee the overall functioning and management of the corporation. They define the strategic orientations of the corporation. They can be liable for what the corporation does if it stems from a wrongful decision they took. They nominate the officers.
Officers are in charge of the corporation. They are the ones responsible for its day-to-day operations.
Below you’ll find some important notions you’ll need to understand before getting your business incorporated. If you have questions, don’t hesitate to contact us. If we can’t answer you, we’ll put you in touch with a lawyer
1. Shareholder agreement
A shareholder agreement is a document that defines the “rules of the game” between shareholders. This document isn’t mandatory but is strongly advised because it defines how shares can be issued, how shareholders can sell their shares and how a third party can acquire them. You’ll need to decide if you want such a document or not.
For more information, see our FAQ- Shareholder agreement (In French only)
2. The corporation’s by laws
The directors and officers adopt the bylaws of a corporation. They are not mandatory but can be useful as they define the internal rules of the corporation and its day-to-day functioning. You’ll need to decide if you want such a document or not.
3. The 45-106 form
This is where things get very “legal”, but read on because this is an important aspect of incorporation. When corporations issue shares, they usually need to publish a prospectus, which is a legal document detailing information that must be disclosed to potential investors. The AMF (Autorité des marchés financiers) will then verify the elements included in the prospectus and its compliance with the relevant regulations. It will then grant a visa attesting that the corporation has respected its legal obligations pertaining to the prospectus.
Corporations can, in certain cases, be exempt from the obligation to produce a prospectus pursuant to the 45-106 regulation. In order to be exempt, corporations have to meet certain conditions. It is the corporation’s responsibility to ensure that these conditions are met.
If a corporation only issues shares to people covered by the 45-106 regulation, it is considered a private corporation and, thus, it does not have to produce a prospectus. People covered are persons who acquire shares for their own benefit and who belong to one of the following categories:
If you are not sure whether or not your corporation is private, please contact us and we’ll put you in touch with a lawyer.
4. Share certificate
Usually, shareholders receive a certificate, which proves that they acquired shares. However, if your corporation is incorporated in Quebec, you are not obliged to issue share certificates. Either way, you must have and keep updated a shareholder register in a corporate records book.
5. Corporate book
Also called a «corporate records book» or «minute book», is a “book” in which all the information pertaining to your corporation is contained. This book is very important, as every corporation must have one and update it. This book contains the articles of incorporation, the resolutions of the shareholders and the directors, the shares’ register, the shareholders’ and the directors’ register as well as any other document deemed necessary.
After your incorporation with Lex Start, we will send you a numerical minute book. You can get a physical minute book for a fee of 150$.
6. Articles of incorporation
After your incorporation, your shareholders and directors will need to adopt articles of incorporation. We’ll send you all the documentation you need. All you’ll have to do is to sign and keep it in your corporate book.
If you have questions regarding the articles of incorporation, contact us and we’ll put you in touch with a lawyer.
7. Legal publicity of businesses
Both federal and provincial companies must register themselves. Any corporation doing business in Quebec has to register with the Quebec enterprise register, even if they were incorporated under federal law or foreign law.
Read our FAQ – Registration and legal publicity (In French only)
Lex Start ensures to incorporate your business as soon as possible once you have submitted your incorporation form. An incorporation can take one to three weeks.
9. Enterprise register
Once your business is incorporated, all the relevant information pertaining to your newly created corporation will be on the Quebec enterprise Register’s website and, if it is a federal corporation, on Corporation Canada’s website.
10. The “ClicSÉQUR” code
Once your company is incorporated, you’ll receive a “ClicSÉQUR” code. This code will allow you, notably, to update online your company’s information and to produce your annual updating declaration.
Now that you know everything about corporations and you want to create one. Lex Start can help you.
Here are the steps: