Canada (Quebec) Corporation
Formation of a Canada (Quebec) Corporation
A Canadian (Quebec) corporation is ideal for establishing and setting up regional headquarters in Canada. It offers a generous tax regime for new investments, tax holidays for foreign researchers and experts, and access to the North American market.
FACTS & INFO
In Canada, there is a choice of 13 provincial and territorial jurisdictions and one federal jurisdiction of incorporation. The federal business law in Canada is the Canada Business Corporations Act (CBCA). When the CBCA was first made law in 1975, it introduced the notion of “incorporation as of right”.
There are several forms of conducting business in Canada: a sole proprietorship - this is basically a non-incorporated business with a sole owner; a partnership - the Ontario Partnership Act defines a partnership as the relationship between persons who are carrying on business in common with a view to profit. It is not a legally separate entity from its partners. A partnership can be either general or limited; a corporation - a corporation is a separate legal entity in law from its owners. It can sue and be sued in its own name. Each jurisdiction in Canada (the ten provinces, the territories and Canada) has its own rules for incorporation; non-profits, co-ops and others - these are more specialised forms of business organizations.
One or more competent individuals who are 18 years of age or older and who are not in a status of bankruptcy may form a corporation under the Canada Business Corporations Act (CBCA). Similarly, one or more companies or ’bodies corporate’ may incorporate a company. These persons are called incorporators. An incorporator (individual or corporation) may form a corporation whose shareholders, officers and directors are other persons, or may serve as the sole director, officer and shareholder of the company. An incorporator is also responsible for organisational procedures, such as filing the articles of incorporation and designating the first directors. A company can be incorporated under the laws of only one jurisdiction. It must be decided whether to incorporate federally under the CBCA, or under the laws of a province or territory instead of the CBCA. Once the corporation is approved, it must be properly organised. For example, the officers must be elected, the corporate seal adopted, the shares registered, etc. This is done through by-laws, meetings and resolutions. The federal government requires that proper records be kept at the registered office of the corporation, which is to include a copy of the articles of incorporation, all by-laws, all amendments, copies of any unanimous shareholder agreements, minutes of meetings, resolutions of directors, a securities register, adequate accounting records, records containing meeting minutes and resolutions, and a register of transfers.
If a corporation's name does not include the term “société par actions” or “compagnie”, it must comprise the abbreviation “s.a.”, “ltée” or “inc.” at the end to indicate that the corporation is a limited-liability corporation. “Corporation/Corp" and "Incorporated/Incorporée" are not acceptable terms to be used for legal endings. The most used legal ending by default is "Inc".
A Quebec company’s name must have a French version in addition to any other language (including English). Alternatively, a Quebec company may be assigned a number as its legal name (for example 123456 Quebec Inc). This speeds up the incorporating process and permits immediate delivery of the articles of incorporation.
Any person may own a share, and this includes individuals, corporations and trusts. Shares are a form of property, and can be bought and sold. However, these rights may be subject to any limitations that may be set out in the act, the articles, by-laws, shareholders’ agreements, etc. The crucial matter is the proportion of shares that is initially issued to each shareholder, rather than the actual number. For example, if there are 2 shareholders and each is to have 50% interest in the company, it is irrelevant whether each shareholder receives 10 shares or 10,000 shares each, since in either case, both receive an equal proportion of the shares. In general, there are three types of rights associated with shares; the right to vote, the right to receive dividends and the right to receive the remaining property of the corporation upon dissolution. These rights can be divided among different types or classes of shares. Normally, the articles of incorporation will provided that an unlimited number of shares can be issued of each class. Classes can be assigned names (e.g. common, preference, non-voting) or simply be listed (e.g. Class A, Class B, Class C). Every private company must have at least 1 shareholder and there may be several (but not more than 50) shareholders. The complete residential address of each shareholder is needed.
Directors are the individuals who administer the affairs of the company and make all major decisions for the company. Every Quebec private company must have at least 1 director, and there may be several. Only individuals may be directors of a company. There is no residency requirement for directors.
Please contact us if you are interested in our nominee director services.
The positions and powers of officers are to be set out in the articles, by-laws and/or resolutions of the corporation. A corporation must have a president and a secretary. It is possible for one person to fill all positions. A shareholder and/or director may also serve as an officer. Usually it is the president who has overall responsibility for the running of the business. The treasurer is the one who must issue the shares but also usually looks after the accounting. The secretary is responsible for ensuring that minutes are taken at meetings, and the corporate records and minute book are properly kept. Only individuals may be officers of the company. There is no residency requirement for officers.
A Quebec company must have a registered office within Quebec. The purpose of the registered office is to establish a location where official forms and notices can be delivered to the company. A post office box may not be used as a registered office address.
A newly-formed corporation should hold its first meeting of directors (called an organisational meeting) shortly after incorporation. The orders of business of an organisational meeting are usually to appoint officers, issue shares, make by-laws, appoint an auditor until the first meeting of shareholders and make banking arrangements. The first annual meeting of shareholders must be called within 18 months following incorporation. After the first meeting, the directors must call an annual meeting not later than 15 months after its last meeting and not more than 6 months after its financial year end.
Incorporation usually takes 18 working days.
RECURRING MAINTENANCE FEES
As from the second year, there are recurring maintenance fees of $680. These include:
- Provision of registered office address
- Preparation and submission of annual returns
Corporations resident in Canada are liable for taxation on their worldwide income, but a non-resident corporation is liable only on income from business carried out in Canada, and disposal of taxable Canadian property (which includes but is not limited to: real and resource property situated in Canada, shares of a Canadian corporation other than a widely traded public corporation, shares of a resident private corporation, capital property used during the course of Canadian business, and certain interests in partnerships or trusts). Until 2001, the basic federal rate of corporate income tax was 38%, reduced to 28% by an abatement on a corporation’s taxable income in a province or territory. The (abated) rate was reduced to 25% under a plan announced in 2000, and then further cut from 25% to 23% from January 1, 2003, with a final reduction to 21% which took place in 2004. Provincial tax cuts were also announced. (NB: This is an approximation of what is in fact a complex system, distinguishing between active and passive income, and between manufacturing and processing income and other active income.) There are further concessions for small businesses.
AUDIT AND ACCOUNTING
A fiscal year-end is the official last day of the fiscal year of a company. The fiscal year-end does not necessarily need to be 31 December. Shareholders of a private company may choose not to appoint an auditor for any given fiscal year and all the shareholders must agree to this decision. However, the decision is valid until the next annual meeting, where all the shareholders must once again decide in not appointing an auditor for the following fiscal year. A Quebec company must file annual returns with the respective authorities.
Our Services and Requirements
OUR SERVICES INCLUDE:
- Name check and approval
- Filling of the incorporation documents with the Registraire des entreprises
- Payment of the government filing fee
- A standard set of original corporate documents
- Payment of the government fee
- Provision of registered office address for one year
- Rubber stamp
Please note: If applying for a corporate bank account you will need to order a full set of legalized company documents when the account is opened outside of Canada. Please contact us if you need our assistance with legalization.
Please provide the following documents for all directors, shareholders, beneficial owners, and authorised signatories:
- Notarized copy of valid passport.
- Original or Certified copy of utility bill / bank statement (as verification of residential address, dated within three months).
- Original or certified copy of Banker’s reference letter (dated within three months).
- In cases where shareholders and/or directors are corporate bodies, full apostilled set of corporate documents and certificate of good standing (for companies registered more than one year).
IMPORTANT NOTE: LICENSABLE BUSINESS ACTIVITIES
If you conduct any activity without the required license or authorisation granted by a relevant authority in any jurisdiction, Starting Business will not be able to assist you with the company formation or bank account opening related to such unlicensed activity.
Licensable activities include, but are not limited to: provision of financial services involving trading/brokerage in foreign exchange, financial and commodity-based derivative instruments and other securities; offering investment advice to public; insurance and banking; operation and administration of collective investment schemes and mutual funds; payment processing services; money exchange, money transmission or money brokering; asset management; safe custody services; gaming, gambling and lotteries.
Please contact us if you need assistance in the licensing of your financial, Forex brokerage or gambling company.
Shipping of corporate documents or banking kits to your destination requires an extra charge and will be automatically added to your order during checkout. Shipping costs for international courier services are set automatically depending on geographic zones.