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A corporation is often used to carry on
business. The process for incorporating a
company or corporation is relatively straightforward.
The complexity, and the problems, come in deciding just
what particular regulatory or other requirements you must
comply with, and how to maximize the benefits to you
of using a corporation to conduct business. The special
skills and seasoned judgment of a business lawyer
to avoid costly mistakes can be well worthwhile.
This article will explain briefly the
process for incorporating a corporation or limited
company. . To learn more about the advantages and
disadvantages of using a corporation to conduct business,
see the article, benefits
of using a
Corporation to conduct business..
On March 29, 2004, British Columbia
adopted the Business
Corporations Act to bring British Columbia in line
with the majority of the jurisdictions in Canada.
Selecting Name of Corporation
The first step in the process is to
decide if you will have a name for the corporation or use
a "numbered company". There is no
requirement for the corporation to have a name. You
can incorporate a company using a number; for example
"123456 B.C. Ltd.". To do this, you
file the application for incorporation documents
described below leaving a blank where the name is supposed
to be. The Registrar will assign the next sequential
number to the corporation as part of its name. A
corporation incorporated in this way is a "numbered
company".
Most people prefer to have a name for
their corporation: to give it a unique identity, to avoid
confusion with other corporations, and to give a general
idea of the nature of the business to be carried on by the
corporation. The name you intend to use must be
approved by the Registrar and reserved by use by making
the application for the name reservation.
If you intended to incorporate the
corporation on your own, then the application for the
name reservation, and other required forms, can be
accessed through the website for the Registrar of
Companies.
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To incorporate a corporation, you must
prepare the following documents, some of which must be
filed electronically with the Registrar
of Companies:
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Notice
of Articles: This is a prescribed form
that must be filed electronically. It must show the name of the
corporation that has been reserved. If you intend
to incorporate as a "numbered company", the
name of the corporation would be left blank. The
notice of articles must also show the full name of
each director together with the mailing and delivery
address for each. The registered and records offices for the
corporation must be stated. The share capital for the
corporation must also be set out in the Notice of
Articles. If there are any special rights and
restrictions attached to the shares, this must also be shown
in the Notice of Articles.
-
Articles These are the detailed
rules and regulations that govern the relationship
between the shareholders and the corporation; and as
between the shareholders themselves, set out the
rights and duties of the shareholders and directors;
the procedures to be followed in electing directors
or holding meetings, and in the conduct of the
business of the company. The Articles would also
contain any special rights or restrictions attached to
the shares. The Articles must contain the restrictions, if any, on the business that may be
carried on by the corporation, and on the powers that
may be exercised by the corporation. The Articles must be signed by the
incorporators. The Articles are not filed
with the Registrar of Companies as was the case under the old Company
Act. The Articles are kept on file at the
records office for the corporation.
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Incorporation
Agreement This is a required agreement
between each of the incorporators of the
corporation. It must state the number and kind
of shares that each incorporator agrees to take, must
contain the full name of each incorporator, and be signed
by each incorporator showing the date signed by each
incorporator. The Agreement is not filed with
the Registrar of Companies. It is kept at
the records office with the other official records of
the corporation..
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Filing Application The
Notice of Articles must be filed electronically. The
Registrar of Companies will no longer accept the paper
forms to incorporate a corporation. The filing can
only be done if you have a BC Online Account, are a
solicitor, or through an authorized filing agenté.
Check the website for the Registrar
of Companies on how to file the Notice of
Articles. If
you need to contact the Registrar of Companies, the
following are the contact details:
Registrar of Companies
2nd Floor-940 Blanshard Street,
Victoria, BC
Mailing address:
PO Box 9431 Stn Prov Gov
Victoria, BC
V8W 9V3
Tel: (250) 387-7848
What fees are payable?
In order to
incorporate a company in British Columbia, and to maintain
the company, the fees payable to the Registrar of
Companies for various services, as of September 1,
2005, are the
following:
| Name Reservation |
$30.00 |
| Incorporation |
$350.00 |
| Certified Record |
$25.00 |
| Filing Annual Report |
$43.39 |
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Must I use a Lawyer to Incorporate?
There is no
requirement to use a lawyer. The prescribed forms
can be obtained from the Government of British
Columbia websites. The
incorporation of a basic corporation can be a relatively
straightforward process, and with a bit of care, most
individuals should be able to incorporate their own
corporation. However, it is
recommended that you be well versed in the provisions of
the Business
Corporations Act if
you intend to do your own incorporation. Using
a lawyer can be of significant benefit. There are
various tax considerations that must be taken into
account. You may also need to attach special rights
and restrictions to the shares in order to establish the
business and financial relationship between the
shareholders. In order to achieve the tax benefits
available from the use of a corporation, such as the
enhanced capital gains exemptions on the sale of shares of
the corporation, a high degree of care must be taken to
ensure the corporation is properly set up..
If you intend to transfer an existing business into your new
corporation, then shares with very specific special rights
and restrictions to take advantage of the tax-free rollover
provisions of the Income Tax Act must be
created. This is a complex and difficult area and not
one to be taken lightly. |
