Difference between revisions of "Incorporating a Company"

If you’re forming a company with a small group of shareholders, a private company can be a good option. Learn the legal issues and steps involved in '''incorporating a private company'''.

 

==Understand the legal issues==

You have options on how to structure a new business. You could use a sole proprietorship, form a partnership, or incorporate a company. For an explanation of the pros and cons of each approach, see our information on [[Starting a Small Business (No. 265)|starting a small business (no. 265)]].  

Under BC’s ''[http://canlii.ca/t/84ld Business Corporations Act]'', there are public companies and private companies.

A '''public company''' has its shares listed and traded on a stock exchange and must follow securities laws.  

A '''private company''' is typically a small company with very few shareholders (sometimes called a '''closed corporation'''). Its shares aren’t offered for sale to the public.  

You can use the BC Registry Services’ [http://www.corporateonline.gov.bc.ca/ Corporate Online] to incorporate a company. You can pay the fees by credit card.

You can incorporate a '''federal company''' under the ''[http://canlii.ca/t/7vf1 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.

A private BC company can carry on business in other provinces if it registers itself extra-provincially in those provinces. But unlike a federally incorporated company, 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.

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 (or be assigned) a numbered BC company name. The [http://www.bcregistryservices.gov.bc.ca/ Corporate Registry] has more information on choosing a name.  

The easiest way to reserve the company name with the Corporate Registry is using [http://www.corporateonline.gov.bc.ca/ Corporate Online]. If the name you want is available, it will be reserved for 56 days.

The '''shareholders''' own the company and vote to appoint the directors. The '''directors''' control and govern the company and oversee how it is run. They may appoint '''officers''', such as a president, secretary and senior management. Typically, the officers handle the daily operations of the company and are overseen by the directors.  

[https://www.canlii.org/en/bc/laws/stat/sbc-2002-c-57/latest/sbc-2002-c-57.html#sec120_smooth Part 5] of the ''Business Corporations Act'' deals with 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.

 

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 available from [http://www.corporateonline.gov.bc.ca/ Corporate Online]. The person who completes it is called the “completing party”. They must ensure the incorporation agreement and articles are properly prepared and signed by the incorporator.  

The articles are the rules and regulations for your company. You can use the sample set in the [https://www.canlii.org/en/bc/laws/regu/bc-reg-65-2004/latest/bc-reg-65-2004.html regulation] under the ''Business Corporations Act'', or have articles specially drafted to suit your needs. The incorporator must sign the articles. You don’t need to submit them to the Corporate Registry, but you should file a copy in the company’s records book.

*the company’s name

*the authorized share structure

*whether 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

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 [http://www.corporateonline.gov.bc.ca/ Corporate Online]. Your company will then be incorporated almost instantly.

==Get help==