Regulation on Company Formation in Canada
Key points of Incorporating in Canada
Major benefits of choosing Canada to incorporate your company are:
- just two weeks to incorporate
- allows single director company
- Canadian resident directors
- Single director – regardless of his nationality
By choosing AbroadBiz services, you can not only leverage our rich experience but also our expertise to form company in Canada.
To begin incorporation of your business we will require the following:
- Document which has the set of rules for the company known as Memorandum
- Terms and condition that ensures the proper governance of the company for the shareholders & directors
- Details of the office locations where it is registered, incorporated and other legal office locations
In order to incorporate the company at the federal level it is important to complete the process ‘Notice of Directors’ and the report of NUANS must be submitted.
In case of state level company incorporation, there are different set of documents for each of the state which needs to be furnished.
Documents you are required to provide:
- Copy of any of the ID proofs from driving license, national ID, or copy of passport which is notarised by authorised notary.
- Address proof document which can be a bank statement which is not older than three months at the time of submission or utility bills like the gas or electricity.
- An original reference letter from the bank is required which should be less than three month old at the time of submission.
- If the shareholder(s) and director(s) of the company are part of the corporate body then the certificate of ‘Good Standing’ for all the members is required. This required for only companies which are registered for more than a year.
Registered Office Requirement
The company which needs to be incorporated must have be registered at local Canadian address.
- The local Canadian address of the registered company will be considered as the designated address in the records of company registration department of the government. The address of the company can be either a commercial property or residential property.
- The main address used for all the transactions and communications for the company will be the registered address.
The company’s director must be decided by you:
- Individuals acting as the directors of the company are responsible for the day to day activities of the company and taking major decisions on the favour of company.
- A company can have single director or multiple, but all the directors must be individuals and not any other entity
- Companies which are incorporated under the federal level with more than one director then 25% of the directorship should be permanent residents of Canada.
- It is mandatory to have a legitimate Canadian permanent resident as the director of the company as he/she cannot be an acting director supplied an agency. However, the state of New Brunswick in Canada allows even the non-Canadians to act as the director for the company incorporation.
- In smaller companies it is a common process to have the same individual as the director as well as the shareholder of the company.
- In order to appoint an individual or multiple individual as the director of the company it is important that you have the following information like their address, permanent residency status and the primary profession.
The company’s shareholder must be selected by you.
- Individuals who have purchased the shares of the company are considered as the shareholder as well as the shared owners.
- It is mandatory to have at least one shareholder for the incorporation of the company, however a company can have up to 50 shareholders.
The company’s officers must be finalized by you.
- Individuals who are recruited to act as the senior management, vice president, company secretary or the treasury of the company are considered as the officers.
- President as well as the Secretary of the company are must have roles that a company should recruit.
- An officer in the company may be designated with multiple roles to perform or offices to manage. For e.g., the individual acting as the director of the company can also be responsible for the role of treasury or the secretary.
- In addition to the multiple roles performed by the officers, they can also be the directors of the company or the shareholder(s). An officer performing in multiple roles of the company is a common scenario in most of the smaller companies incorporated in Canada. There is no restriction of mandatory Canadian residency for the officers of the company.
- To appoint an individual as the director of the company, it is important that you have the following details of the individual: home address and primary job role.
Soon after the company is incorporated, the company should call for the meeting of the directors which is also known as the ‘Organizational Meeting’. The purpose of this meeting is to streamline the process of appointing the senior officers for the management, issuance of shares, finalizing the auditor for the company with shareholders and making the required arrangements for the banking processes of the company. The first annual meeting of the company should be arranged within the first 18 months of the incorporation. The following annual meetings after the first meet can be scheduled at every 6 months in a financial year without a maximum gap of 15 months from the previous meeting.
Annual Audit and Financial return Requirement
The annual financial year end of the company must be finalized.
The fiscal year is also known as the accounting year or the financial year of 12 months defined by the company for the purpose of managing their accounting and business transactions. Any 12 month period can be selected by the company as per their business needs. It is not mandatory to have a fiscal last date on December 31st.
Almost all the companies have the fiscal year end on December 31st so if you want you can follow the same or change as per your business requirements with specified reason.
The auditors, financial experts and accountants of the company need to be finalized.
Based on the final decisions of the shareholders, company can decide whether to appoint an auditor or not, in the fiscal year. It should be joint decision taken by all the shareholders of the company. The decision of appointing an auditor or not by the shareholders is valid only till the next annual meet. The joint consent of the shareholders for the appointment of the auditor has to be taken again for the following fiscal year.