annual resolutions
incorporation - explanation
incorporation process
jurisdiction
name
organizational stuff
shareholders
shareholders agreement

Incorporation

A corporation is a company which gives its owner(s) protection from personal liability.  If a corporation has debts or it has liability as a result of a defective product or otherwise, the shareholder(s) of the corporation will not be personally liable (as long as the Shreholder has not given a personal guarantee for the debt or liability).  If the corporation deals with a bank for a line of credit, generally the bank will require the personal guarantee of the shareholder.

 

Jurisdiction

The corporation may be incorporated either provincially or federally.  A Provincial incorporation is somewhat simpler, a little less costly, and generally sufficient for the requirements of most business owners.

 

Name

 

A corporation may be either a “numbered” company  or may have a name.  A numbered company has a seven-digit number followed by Ontario and then Limited, Ltd., Incorporated, Inc., Incorporation, Corp. (eg. 1234567 Ontario Ltd.).

 

If you wish to incorporate using a name, we have to conduct a name search in order to ensure that name is available.  We can obtain a verbal name search at no cost which will indicate generally whether the name that you want to use is or is not available.  Even though a name is technically available, there could be a problem with using a particular name.  If the name you choose is similar to a name used by another company, and the other company’s name is well known in the area in which you intent to conduct your business, then the name may not be available or it may not be a good idea for you to use it.  We can provide you with more specific advice about the name that you want for your corporation. 

 

Shareholders

A corporation issues shares.  The people who own the common shares of the corporation are the owners of the corporation.  A corporation can also issue other types of shares.  These might be necessary if you are doing a business reorganization or you want to generate capital through the sale of shares. 

 

Shareholders Agreement

If there is to be more that one shareholder, we recommend to you that you have a shareholders agreement.  A shareholders agreement is like a marriage contract for people going into business together.  It is not entered into because you expect the corporation to fail, but rather to provide for the eventuality of the shareholders not being able to agree with respect to the company.

 

Incorporation Process

Articles of Incorporation

A corporation is created by Articles of Incorporation being filled out, signed and filed.  This is not a lengthy process - it can be completed within a day or two.  If a name search is required, it may take an additional day or two.

 

Organizational Material

 

Some people think that once they have the Articles of Incorporation, their company is properly constituted.  In fact, in order for the corporation to be properly constituted, certain by-laws and resolutions have to be prepared and signed.  The by-laws will set out the manner in which the corporation conducts its business.  Although the by-laws are generally lengthy, they are standard for most small corporations.

 

Annual Resolutions

 

In order for your corporation to remain properly constituted, it must complete annual resolutions.  We can complete these for you at your request automatically each year.  Failure to keep the annual resolutions current may result in a loss of the limitation of personal liability, so it is very important that the resolutions be kept up to date.