Incorporation Lawyer in Mississauga

Ontario or federal?

An Ontario corporation is incorporated under the Business Corporations Act (OBCA) and registered through the Ontario Business Registry. A federal corporation is incorporated under the Canada Business Corporations Act (CBCA) through Corporations Canada, and must then register extra-provincially in each province where it carries on business, including Ontario.

Federal incorporation gives stronger national name protection and the right to operate across Canada under one corporate identity. It also brings a second layer of annual filings and extra-provincial registrations. For a business operating solely in Ontario, provincial incorporation is usually simpler and cheaper to maintain.

One historic reason for choosing federal has gone: since 5 July 2021, the OBCA no longer requires that 25 per cent of directors be resident Canadians. Ontario corporations can now have entirely non-resident boards, which removed a significant obstacle for foreign-owned businesses.

Share structure is the decision that matters

Most off-the-shelf incorporations issue a single class of common shares split between the founders. It works until it does not, and when it stops working, unwinding it triggers tax, requires everyone’s cooperation, and costs several multiples of what doing it properly would have.

A considered structure anticipates what the business will need.

• Multiple classes, so voting control, dividend entitlement, and growth can be allocated separately
• Non-voting shares for family members or passive investors who should share economically without controlling
• Preferred shares for an estate freeze, fixing today’s value in one class and letting future growth accrue to another
• A holding company, allowing surplus to be moved out of the operating company tax-deferred and away from operating risk
• Room for a family trust, where income splitting or a future multiplication of the lifetime capital gains exemption is contemplated
• QSBC eligibility, so the lifetime capital gains exemption is actually available on a future sale

These decisions sit at the intersection of corporate law and tax. We work alongside your accountant rather than around them, and where the tax analysis should drive the structure we will say so.

What a complete incorporation includes

Filing the articles is one step of about a dozen. A properly organised corporation has:

• A NUANS name search and reservation, or a numbered company where the name will come later
• Articles of incorporation setting out the share classes and any restrictions
• Organising resolutions: appointing directors and officers, issuing shares, adopting by-laws, appointing an accountant, and setting the fiscal year end
• By-laws governing how the corporation is run
• Share certificates, and a securities register that reconciles to them
• Registers of directors, officers, and, since 2023, individuals with significant control
• A minute book, kept current rather than assembled in a panic during a sale
• Registration for the tax accounts the business actually needs

The transparency register

Since 1 January 2023, OBCA corporations must maintain a register of individuals with significant control, broadly, anyone holding or controlling 25 per cent or more of the shares by number or fair market value, or with the ability to exercise material influence. Federal corporations have had a comparable obligation since 2019, and CBCA corporations must now file that information with Corporations Canada annually.

This is a live compliance obligation with penalties attached, and it is the item most commonly missing when we review a minute book for a transaction.