B.C. Incorporation - Overview
This section indicated by the Index Bar to the left entitled "B.C. Incorporation" deals with incorporation of a company under the Business Corporations Act of British Columbia, Canada (referred to as the "Business Corporations Act") which replaced the Company Act at the end or March, 2004. Note the Legend on the Index Bar to assist in your review of these pages.
1. Federal or Provincial?
In British Columbia, Canada, there are several ways to establish a corporation. However if the corporation is to own a for profit business, there are two choices: Federally, under the Canada Business Corporations Act (the "CBCA") or Provincially, under the Business Corporations Act.
Generally one chooses to incorporate under the CBCA if it is important to be able to have the right to operate under the corporate name anywhere in Canada. Since a Canada wide name search is conducted, this is a more time consuming and expensive procedure than is required to search a name for a company under the Business Corporations Act. Another reason to incorporate under the CBCA is if there is a need to have a Canada wide (federal) presence. If you have any questions regarding CBCA corporations, please contact us.
2. B.C. Incorporation
If neither of the above reasons to incorporate a CBCA corporation apply to you, it is usually faster, easier and less expensive to incorporate under the Business Corporations Act.
Generally there are two types of companies under the Business Corporations Act: public and Private. Very loosely, Public companies are usually companies which offer their shares for sale to the public on a stock exchange (called "shareholders" under the Business Corporations Act). The rest of this overview will deal with Private companies under the Business Corporations Act. If you require further information about Public companies under the Business Corporations Act, please contact us.
To incorporate a Private company under the Business Corporations Act you must prepare and have signed the Incorporation Application, Incorporation Agreement, Notice of Articles and Articles and incorporate "online" using BC Online.
Shareholders are the persons that hold shares or stock in the Company. Shareholders are called "shareholders" under the Business Corporations Act. In some jurisdictions, shareholders are known as "stockholders". Please click here for information regarding Share Classes and Issuing Shares.
The Notice of Articles of a Company sets out the name of the Company, the full names and prescribed address for each director, the mailing and delivery addresses of the registered and records offices of the Company, any translation of the Company's name that it intends to use outside Canada, the different classes of shares which may be issued by the Company and whether there are any restrictions or restrictions attached to any of them . If there are no restrictions in the Notice of Articles of the Company, unless otherwise prohibited by legislation requiring special approval, a Company has the same powers as a natural person. In Canada, special approval is required to incorporate a Company to carry on certain types of businesses. Often this requires accreditation from a public body or organization whose function it is to protect the public interest. So for example, only licensed physicians and surgeons may incorporate a Company which provides medical services to the public.
The Notice of Articles is attached to the Incorporation Application and referred to in the Incorporation Agreement, signed by one or more "Incorporators" and beside each of their names is written the number and class(es) of shares which they are being issued on incorporation of the Company.
Please click below for more information on:
Company Names or Share Classes and Issuing Shares
If you require further information about restricted businesses and special approval, please contact us.
The Articles of a Company are what many people refer to as the "Bylaws" and deal with such things as the procedure for calling General Meetings of shareholders, appointment of directors, directors' duties, appointment of officers (e.g. president, secretary, vice-president, treasurer) and officers' duties. The Business Corporations Act contains provisions which operate by default if not changed in the Articles. For example, the directors of the Company must manage or supervise the management of the affairs and business of the Company unless the Articles otherwise provide. The Articles constitute a contract between the Company and its shareholders. The Business Corporations Act also contains provisions that can not be overridden regardless of what the Notice of Articles or Articles provide.
If you require further information about the standard Articles we use, which provisions may be overridden and which may not under the Business Corporations Act, please contact us.
Registered and Records Offices
As mentioned above, the Notice of Articles must contain the mailing and delivery addresses for the "Registered" and "Records" Offices for the Company.
The Registered Office is the office to which the Registrar of Companies sends all notices if there are any filings or information required and to which court proceedings may be served on the Company. Accordingly, it is very important that this be an office open for business throughout the year and that has a knowledgeable person there to receive any such notice, requests or court documents. This is one reason why we recommend that you use our offices as the Registered Office of the Company.
The Records Office is the office at which certain records required by the Business Corporations Act are to be kept. This includes the certificate of incorporation for the Company, its Notice of Articles, Articles, a register of directors and officers, the central securities register (register of shareholders), minutes of meetings of directors and minutes of meetings or shareholders. The Business Corporations Act requires that:
all of those documents (except directors' and shareholders' minutes) be available for inspection and copying by shareholders of the public;
all of those documents (except directors' minutes) be available for inspection and copying by shareholders; and
all of those documents be available for inspection and copying by directors
during certain hours every business day. Accordingly, it is very important that this be an office open for business through out the year and that has a knowledgeable person there who can produce those documents for review by the appropriate persons. This is one reason that we recommend that you use our offices as the Records Office of the Company, as well.
Directors
As mentioned above, the Notice of Articles are to set out the first directors of the Company. If you wish to change (remove) directors, resolutions must be passed and a Notice must be filed with the Registrar of Companies "online" using BC Online, setting out which directors have been removed and which are being added, including their full names and residential addresses.
Click here for more information on Directors and their qualifications, responsibilities and liabilities.
Note: every Company must have at least one shareholder and director – even if the same person is both.
Officers
Officers are the high level management employees of a Company such as the President, Secretary, Treasurer, Vice-President, General Manager, etc. (Note: usually the Secretary, among other things, is responsible for the records of the Company.)
Click here for more information on Officers and their qualifications, responsibilities and liabilities.
Auditors
Auditors are independent Chartered Accountants or Certified General Accountants who, put simply, review and check the financial records of the Company and confirm that the Financial Statements of the Company meet certain standards. Generally, this is done for the protection of the shareholders of the Company so that they have some assurance that the management of the Company is being financially responsible and honest. For private companies, there does not need to be an auditor so long as all shareholders waive that requirement each year.
Annual Meetings and Proceedings
The Company is required to hold its first Annual General Meeting not more than 18 months after the date of incorporation and thereafter, the Annual General Meeting must be held at least once in every calendar year and not more than 15 months after the last Annual General Meeting. Alternatively, if all shareholders consent in writing to the business to be transacted, a meeting need not be held, however this also must be done within those time frames. A balance sheet and other financial information of the Company and the report of the directors are required to be presented at each Annual General Meeting. The balance sheet and financial information must be made up to a date not more than six months prior to the meeting. If we act as the Registered and Records Office for the Company, as part of our service we prepare and send the necessary consent resolution documents to you.
Annual Report
The Company is required to file electronically, each year, an Annual Report with the Registrar of Companies, within two months after the anniversary date of its incorporation. If we act as the Registered and Records Office for the Company, as part of our service we will enter the name of the Company in our Annual Proceedings Register, and unless you otherwise instruct us, we will prepare and forward to you the documents necessary to fulfill these requirements.
Note that, should a company fail, for more than two consecutive years to file an Annual Report, the Registrar of Companies may forward a notice to the registered office of the company stating that the company will be struck from the Register of Companies under Business Corporations Act if steps are not taken, within 30 days of the date of the notice, to have the Company brought into good standing. Once a company has been struck from the Register, all assets that the company owned (i.e. land, buildings, equipment etc.) escheat to (become the property of) the Crown (that is, the Province of B.C.). Restoring a company to the Register, is a costly and time consuming procedure. If the company has been struck from the Register for one year, any real property which escheats to the Crown can only be transferred back to the company by Order in Council. Restoration of the Company to the register is a costly procedure. This is another reason why we recommend that you use our offices as the Registered Office of the Company.
Seal
Having a corporate seal for a company may seem somewhat archaic, however, there are still circumstances where it is beneficial to have one. For example, some banks may require that documents be signed by the Company "under its corporate seal". This is because a document "executed under seal" may not require "consideration" (value to be given) in order for it to be enforceable. Accordingly, it is often advisable to provide for a corporate seal.
Limited Liability
It is important that all persons doing business with the Company are notified that they are dealing with a company and that all contracts should be in the name of the Company, otherwise the persons who thought they were acting on the Company's behalf may be personally liable instead of the Company. The name of the Company should be posted at its place of business so that persons dealing with the Company will know that they are dealing with a company. This will not, however, relieve the persons who previously operated the business from personal liability for existing contracts and liabilities.
Shareholders Agreement
A Shareholders Agreement is an agreement between all shareholders of the Company (and often the Company itself) regarding various matters concerning the Company. For more information, click here: Shareholders Agreements then click "Overview" on the left hand side navigation bar.
If you have any questions regarding the above please contact us.