19 Mar 2016

Choosing a Name for Your Canadian Corporation, Partnership or Sole Proprietorship

by Holly Crosgrey | posted in: Business Name Registrations, Incorporation, NUANS, Ontario Business Names Act, Operating Trade Name, Partnership, Sole Proprietorship | 0

When choosing a name for your Canadian corporation, partnership or sole proprietorship you need to ensure that your name is distinct and different from any other registration on file federally and in all provinces and territories across Canada. In order to determine this you will need to perform a preliminary name search. Before performing a preliminary name search you should read the following information.

Aspects Required When Choosing a Name for Your Business

If you are registering a corporation, you will be required to have a legal element (explained below) but for other registrations such as sole proprietorships, business names and partnerships this will not be necessary. The information herein explains what to look for when using a name for a corporation however the principles can be applied to business names, partnerships and sole proprietorships as well.

When deciding on a name for your corporation, you should consider three aspects of the name as follows:

(1) the Distinctive Element

(2) the Descriptive Element, and

(3) the Legal Element.

Distinctive Element
Vancouver
Dominique's
Butterwind

Descriptive Element
Lawn Mowing Services
Graphics Design
Wind Surfing Instruction

Legal Element
Ltd.
Corp.
Inc.

Distinctive Element of a Name – If the name you choose to register is “Crosgrey Carpentry Inc. , the distinctive element is the word “Crosgrey”, which is distinctive because it is my last name. Another example of a distinctive element in a name might be “Grenville” as in “Grenville Garden Supplies Ltd.” which is distinctive because it describes a location. “Starcross Dental Services Corp.” has the distinctive word “Starcross” in it to make it stand out from other dental service companies.

Descriptive Element of a Name – The descriptive element describes the type of business. In “Crosgrey Carpentry Inc.”, the descriptive element is “Carpentry” which describes the nature of business. In “Grenville Garden Supplies Ltd.” the descriptive element is “Garden Supplies” which describes the type of products this business sells. “Dental Services” is the descriptive element for “Starcross Dental Services Corp.”.

If you were to use the name “Starcross Ltd.” it does not describe the type of business. You can incorporate this company, if the name is available, but because it is such a short name there may already be a conflict and it would not be suggested to register such a short name. There are 1,000s of these short names registered already and most of them are already taken. Let us consider that “Starcross Inc.” has been registered. When you do a preliminary name search on the name “Starcross Ltd.” the name search report says “Starcross Ltd.” is available. This would still be a very poor choice of name since the person who owns the company registered as “Starcross Inc.” would consider your name as a conflict even though the government in some jurisdictions would allow you to register the name because it is different and not exactly the same. The onus is on you to ensure your name is distinct and different from others, not the government. In fact in some provinces such as Alberta and Ontario you can register a business name, sole proprietorship or partnership with the exact name as other registrations. This is not a requirement for them so if you do not pre-clear your name in advance they will not inform you before registering of any other names that would be a conflict. The only requirements in those provinces for distinct names would be for incorporations.

Purchase NUANS or Name Search Report for a New Business

It is best to have a descriptive element in the name to avoid any future conflicts that you may not be aware of when you register your company especially if you are performing your own searches without the help of a search house. Search houses are trained to look for conflicts such as this and it is your best option to have a search house check your name. For the low cost it is worth being safe. You could be forced to change your name if a company took you to court for this issue. If they have had use of their name for many years and are highly placed in the marketplace, they might be able to force you to change your corporation’s name. This would then mean that, even though you have built up a relationship with your clients using the name you first chose, you might be forced to change it and thereby lose some of your standing in the marketplace. The loss of income and the additional expenses resulting from such a situation could be high. Therefore, it is important your corporation’s name is very distinct and different from other names of existing companies across Canada. This would include any companies registered in Canada whose home base is outside of Canada. As well, never order stationery, business cards, etc. before your company is incorporated.

Legal Element of a Name – The Legal Element is the word “Inc.” which is a mandatory ending which recognizes the name as the name of a company. In Canada you can have the following endings for your company name: “Inc.”, “Incorporated”, “Ltd.”, “Limited”, “Corp.”, “Corporation” and the French equivalents of “Ltee.” “Limitee”, “Inc.” (same in English and French) or “Incorporee”, The Legal Element distinguishes your name as a share corporation rather than a business name, sole proprietorship or non-share corporation.

It is best to consider a name that has a minimum of four words. Otherwise, you may choose a name that is too close to another existing corporation’s name.

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Preliminary Name Searches

You should always do a preliminary name search prior to obtaining a name search report or a NUANS name search report.

The distinctive element of a name can be your name, i.e. “John Smith” or it might be a group of letters, i.e. “GSA” or it might be the name of a town, “Newmarket”, etc. The more distinct the name, the more likely it will be that the name will be available for use.

The descriptive element of the name should be very broad and detailed. The more detailed your descriptive element is the more likely your name will be different than others. For instance, using the descriptive element “Services” is vague but the use of the descriptive element “Dry Cleaning Services” is broader. The descriptive element “Dry Cleaning and Clothing Repair Services” would be even better.

Choosing a Name for a Quebec Company

If you are going to carry on business in Quebec then you will need a French name,. The name can be the name of the company or an English named company with a French business name. If you chose you can have an English and a French name in your articles. You will need two NUANS reports when incorporating. One for the English version of the name and one for the French version of the name.

26 Feb 2016

Sole Proprietorship

by Holly Crosgrey | posted in: Alberta, British Columbia, Business Name Registrations, Manitoba, New Brunswick, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Saskatchewan, Sole Proprietorship, Yukon Territory | 0

What is a Sole Proprietorship

A sole proprietorship is a registration of a business that is owned by an individual. The proprietor is said to be self-employed. This is the simplest form of a business organization. The proprietor secures the capital, establishes and operates the business, assumes all the risks, accepts all the profits and losses, and pays all the taxes. Any legal responsibilities arising out of the business activities are the proprietor’s. All assets, business or personal, can be legally used to discharge the liability.

Is Registration of a Sole Proprietorship Necessary?

If an individual wants to carry on business under his or her own name then he or she does not need to register. In fact some provinces will not allow registration under your own name. However, if you wish to obtain other types of licenses for your business, you may still need to register and may need to choose a different name in order to do so. If the individual wishes to carry on business under a name other than his or her own then he or she must register that name. An example of a sole proprietorship would be Joe’s Dry Cleaning.

What Jurisdictions in Canada Govern the Registration of Sole Proprietorships

Sole Proprietorships are governed pursuant to the provincial and territorial legislation in Canada. Depending on the province or territory in which you live, there will be a different procedure. However, basically a form will need to be completed and a fee will need to be paid. In some provinces or territories the name of the sole proprietorship will also need to be cleared and there is a fee for this. Refer to the individual provincial and territorial sections herein for sole proprietorships for more details about which provinces and territories require a name search report accompany a registration. For information on how to conduct a name search refer to the sections entitled Preliminary Name Search, Choosing a Name and NUANS Name Search Reports.

Why does the Business Name have to be Approved in Most Provinces or Territories

The practical reason why names have to be approved is to prevent the registration of names which are identical or deceptively similar. Most provinces and territories will not allow an exact business name to be registered although Alberta and Ontario will allow you to do this. The onus is still on you to ensure the name you choose and register is distinct and different from other names already registered.

The law prevents the use of names which are so similar as to confuse or mislead people, and provides a record which allows the public to determine which individuals are behind the name. The practice of registering the name does not mean you own the name. It just means that the name is protected with respect to the public interest. If you need more protection for your name you need to trade mark the name.

It is important to know that business names used in sole proprietorships do not have the same protection as a corporate name used for a company.

What are the Advantages of a Sole Proprietorship

Simple Start Up – Starting a sole proprietorship is a simple registration although consideration should be given to the name guideline procedures. The cost of registration is low.

Less Government Regulations – There are few government regulations to follow. The registration usually has an expiry date and it will be necessary for the sole proprietor to remember to renew the registration since the government will most likely not send out a reminder.

Decisionmaking – You will make all of the decisions and choose your own work projects on your own timeline

Work Hours – The sole proprietor will be able to make his or her own hours

New Challenges – There will always be new challenges as the business expands and grows

Income Opportunities – If the business is successful you will most likely make more than you did as an employee.

Tax Advantages – The government provides many tax advantages to small business owners.

Work Environment – The sole proprietor will be able to create is or her own work environment that is comfortable for them.

Less Expensive to Run – It is cheaper to run a sole proprietorship because there are fewer government requirements and managing the tax filings is less complicated

Expansion of the Business – Once the business starts to grow it is relatively easy to expand the business into a partnership or a corporation

Profits – The sole proprietor receives all of the profits of the business and does not have to share them with anyone else.

What are the Disadvantages of a Sole Proprietorship

Limited Creativity – The sole proprietorship does not have any one else to run ideas by or to obtain fresh ideas from.

Longer Hours and Less Free Time – Although you may choose your own work hours it is most likely you will work more hours than you did as an employee

Less Security – Although no one can fire you your security is only as strong as your business position. If the business is having financial difficulty it will affect you personally.

Personal Liability – The sole proprietorship is personally liable for the debts of the business and if the business has any financial difficulties, the creditors can come after the personal assets of the sole proprietor

Personal Taxation – You will be taxed against your personal tax return which can result in a higher tax rate if you make too much money

Less Money – You may make less money than you thought you would and may not be able to survive

Difficulty in Raising Capital – The proprietor may have difficult in raising capital and financing

Less Professional Appearance – A proprietorship appears as a less professional business in relation to an incorporated company. Some potential business acquisitions could be lost because the business does not appear to be ….

Government benefits – You may not be eligible for government employment benefits, health and dental benefits, life and disability insurance benefits, a pension plan, etc. and will find it necessary to pay a large month premium to pick up these benefits in your business

Investment of Personal Funds into Business – You may need to invest your savings in your business

One Person Success – Your success will be dependent solely on you and the manner in which you conduct your business. You will not have others to run ideas by or to help with the business.

Personal Liability – The sole proprietor is responsible personally for all of the obligations of the business including all losses and liabilities, including those arising from the mistakes of the sole proprietor or those of any employees he or she may have. Any lawsuit brought against the business will be the responsibility of the proprietor if any money is owed. Businesses which have any type of risk involved for employees, such as builders, contractors, may not be the best choice of business for a proprietorship because of the liabilities of any accidents that may occur and adequate insurance should be obtained

Death Results in Termination – The death, disability of the owner may result in the termination of the business

Taxation of Sole Proprietorships

Business income is taxed in the hands of the owner as personal income. All business losses, except for some, can be deducted from the owner’s personal income tax. At lower levels of income it may be more advantageous to be a sole proprietor because the corporate tax rate may be greater than the lowest personal income tax rates. At higher levels the corporate rate may be less. You should discuss this with your accountant before making a decision on the best form of business to start.

How Long Is the Registration of My Sole Proprietorship in Place

The registration of a sole proprietorship lasts from three to five years depending on where it is registered. The governments do not forewarn you that your registration is going to lapse and you must renew it just prior to or on the expiry date. Some jurisdictions may provide for a grace period. Further in some jurisdictions the registration is perpetual and it is up to you to cancel the registration if you decide to not continue the business at some point. It is suggested that you renew just prior to the expiry date.

What Happens If I Do Not Renew My Registration on the Expiry Date

If you do not renew your sole proprietorship registration on time you will need to register your sole proprietorship as a new registration. It will be given a new registration number. If this occurs you should let Canada Revenue Agency know about the new registration number so they can connect it to your federal Business Number. You should send a copy of the new registration to them with your tax return.

Do I need a GST/HST Number for My Sole Proprietorship

If your sole proprietorship is making over $30,000 a year you must charge GST/HST. Once you register for GST/HST regardless of whether you have a gross profit of $30,000 you will be expected to charge GST/HST so make sure you are at this level before you do this. Your Revenue Canada Business Number is your base number. If you need a GST/HST number it is added as an extension onto the base number. Individuals will be issued one Business Number only. If you have more than one sole proprietorship, each of them will use the same Business Number. However, if you wish you can have two separate GST/HST numbers so you can track the GST/HST on each sole proprietorship separately OR, you can combine all GST/HST for all of your sole proprietorships under one GST/HST extension number. When you register for a GST/HST extension number to your Business Number you need to consider whether you have had a Federal Business Number issued in the past for a prior proprietorship. If this is the case you would use the same Federal Business Number and just let the government know that you have registered a new sole proprietorship by sending them a copy of the registration. If you wish a new extension number then you should request this from Revenue Canada Agency.

What If the Information Provided on the Sole Proprietorship Form Changes

If any of the information on the form that you initial registered changes an amendment must be filed.

What If I Wish to Change the Name of My Sole Proprietorship?

The name of the sole proprietorship cannot be amended. If you wish to change the name of your sole proprietorship you will need to register a new sole proprietorship and cancel the existing one.

What if I Wish to Cancel my Sole Proprietorship?

In order to cancel a sole proprietorship you must file a cancellation notice. The procedure to cancel is different in each province or territory. We will be glad to assist you with your cancellation if needed.

What If I Do Not Register My Sole Proprietorship

If you decide to carry on business under a name other than your own and you do not register pursuant to the legal requirements you could be levied a fine. One of the purposes of registration is to allow individuals and corporations who contract your services to be able to include your contact information on court documents if they wish to sue your sole proprietorship. If at any time a client or customer determines that you are not registered, a complaint can be filed with the government and a fine could be levied.

On the other hand, if you wish to sue a customer for non-payment or otherwise, if you are not registered as required by law, you will not be able to pursue a lawsuit in any court.

The internet has enabled potential customers to look into businesses prior to dealing with them. In order to ensure these individuals decide to use your services or buy your products over others, a legal business is the first step in gaining their confidence.

What If I Wish to Conduct Business as a Sole Proprietorship in More Than One Province

Firstly you will need to ensure you are registered in your home jurisdiction. Secondly, you will need to register “extra-provincially” in any other jurisdiction. Contact us for more information about registering an extra-provincial sole proprietorship.

Renewing a Sole Proprietorship

A sole proprietorship registration will stay in effect for a period of three to five years depending on the province or territory. The onus is on the sole proprietor to ensure his or her registration is renewed. The government will not remind you that your registration is going to expire. It is up to the sole proprietor to keep track of the expiry date and to renew the registration just before that date. In order to renew a registration you can follow the same procedure as you did for registering the sole proprietorship in the first place.

Financial Year End of a Sole Proprietorship

A financial year end of a sole proprietorship is December 31st since it coincides with filing your personal tax return.

Why Is it Important that the Address of my Sole Proprietorship is Correct?

It is important that the government knows your current address. The government occasionally changes policies and sends out information to the address on file. If they do not have your correct address you may miss out on valuable information that could affect your business.

13 Feb 2016

NUANS Name Search Reports

by Holly Crosgrey | posted in: Carrying on Business in Canada, Extra-Provincial Registration, Foreign Business in Canada, General Corporate Law, Incorporating in Ontario, Incorporation, Incorporation in Alberta, Incorporation in British Columbia, Name Granting for New Businesses, NUANS, Ontario, Ontario Business Corporations Act | 0

Which Provinces Accept a NUANS report versus a Specific Province Name Clearance Report?

The province and territories which accept the NUANS report are: Alberta, Ontario, New Brunswick, Federal, Nova Scotia, Prince Edward Island and Yukon. All other jurisdictions in Canada will require a name search report specific to that province or territory.

In Alberta and Ontario you are not required to provide a name search report of any type for sole proprietorships, business names or partnerships, however, it is still advisable to perform a preliminary name search since the onus is on you to ensure the name has not been taken by any other business. If you are ordering a name search report or a name search specific to a province as required by the type of registration you are wanting, our service automatically includes preliminary name searches. The only time you would order a preliminary name search would be if you are registering a business name, sole proprietorship or partnership in a province that does not require a name search report such as Alberta or Ontario.

Name search reports and NUANS name search reports all provide the same kind of information. They determine whether a proposed name has been used by any other business across Canada and also provide a list of similar names already registered. Be advised that these reports are specific to the province they are ordered for. For instance a Federal NUANS report cannot be used for an Ontario company.

Purchase a NUANS Name Search Report

What is a Name Search Report

A name search report compares the name of a proposed business to all other names already registered across Canada.

A NUANS report is specific to certain provinces and is a seven-page report which is generated from the search system which compares a proposed name or trade-mark with the database of existing names that have been registered anywhere across Canada.

Let our Experts assist you with obtaining a NUANS or Name Search Report for your New Business

What Information is Provided by a Name Search Report or a NUANS Report

By comparing the proposed name against the NUANS name search system or a name granting system in a province or territory, any similarity existing between the proposed name and the names in the database, will show up on the name search report. This will allow you to determine whether you are planning on using a name for your company that is too similar to another name. It is important for your name to be as distinct as possible. If you are ordering a name search for a province that does not accept the NUANS you will be provided with a name search that compares names to other names in that particular province or territory but the name search report will also look at similar names in other provinces right across Canada that may be a conflict.

What is A NUANS Search System

The NUANS search system is a computerized search system which contains a list of all of the company names, sole proprietorships, partnerships, business names and trade-marks registered in the federal, provincial and territorial jurisdictions in Canada. The purpose of the system is to keep track of all names registered across Canada.

Even if a province or territory has its own name search system in place, the NUANS system will pick up those names in its database and therefore when performing a preliminary name search the search system is the best way to get a pre-clearance of your name.

Only search houses can perform preliminary name searches or full NUANS name searches through the NUANS system with the exception of the federal government’s site which provides limited access to doing searches.

The federal website’s preliminary name search system is limited in that it does not allow for broad searches and it is not workable if ordering a Federal NUANS and it is limited with respect to doing preliminary name searches for other provinces and territories. In order to effectively do a preliminary name search on your proposed business you must have an experienced search house perform the search.

What is a Name Search Report and NUANS Report Used For

A NUANS name search report must accompany articles of incorporation when incorporating a company in the federal, Alberta, Ontario, New Brunswick, Prince Edward Island and Yukon jurisdictions of Canada.

NUANS reports are also required in some provinces for registration of business names and partnerships. In Ontario and Alberta you are not required to provide any form of name search when registering a sole proprietorship or partnership.

Do All Provinces and Territories Accept the NUANS Name Search

Some provinces and territories have their own name search system and they do not except the NUANS name search report. Those provinces and territories will require a name search specific to that jurisdiction. The jurisdictions in Canada that do not accept the NUANS report are British Columbia, Manitoba, Saskatchewan, Nunavut and Northwest Territories.

If you are registering a sole proprietorship, business name or partnership in a province or territory where a name search or NUANS report is not required (such as Ontario or Alberta), it is a good idea to perform a preliminary name search to ensure the name is available but a full name search report or NUANS report would not be necessary. All you need to do is ensure the name is available before you register your sole proprietorship or partnership.

Even though not all provinces and territories accept a NUANS report since all names registered in those jurisdictions are recorded in the NUANS database, it is still advisable to do a preliminary name search through the NUANS system to ensure the name is available. Resources for Canadian Business Owners can provide you with a preliminary name search for situations for situations when a full NUANS report is not required.

If you require a name search report or NUANS name search report to register your company, business name, sole proprietorship or partnership, Resources for Canadian Business Resources Inc. will provide you with unlimited free preliminary name searches when a name search report or NUANS report is ordered through us.

Purchase a Name Search Report

How Does the NUANS Name Search System Capture the Names from the Other Name Search Systems in Canada

The governments which do not accept reports from the NUANS name search system provide a list of any names that have been registered in their province or territory to the NUANS name search system and these names are added to the NUANS system database on a regular basis.

Why is a Name Search or NUANS Report Necessary

You cannot incorporate a company with a name that is exactly the same as another name already registered. It does not matter whether you are registering a company in PEI and the duplicate name is in BC, you will not be able to register an exact name.

When you go to incorporate a company the government must first know if that name has been taken. In order for the government to ensure that the name is free to use it needs to see a NUANS name search report or similar name search report depending on the jurisdiction.

The report will show the government whether there is an exact name already registered for the proposed name you wish to use. The name search report is also your way of determining whether there are additional conflicts to your name. The onus will be on you to look over the entire report and make sure you are not proposing to use a name that is even close to another corporate name or trade-mark since the owner of the name could still have a claim against you if your name is too similar and his or her company name has had a large presence in the marketplace for many years. Order a NUANS name search now.

How Do You Ensure Your Proposed Business Name is Distinct

Refer to the section on name guidelines for more information on how to ensure you have picked a distinct and descriptive name for your company that will not be challenged by the government or another company.

Are There Different Types of NUANS Name Search Reports

Each jurisdiction that accepts the NUANS Name search report will have its own form of NUANS report. If you are incorporating an Ontario company you will be required to obtain an Ontario NUANS Name Search report. If you are incorporating a federal company you will be required to obtain a federal NUANS name search report. If you are incorporating an Alberta company you will be required to obtain an Alberta NUANS Name Search report. Despite the fact that each of these reports is different, all reports will search the NUANS database system for similar names right across Canada.

Why Are Federal Name searches different from Alberta Name Searches, Ontario NUANS, PEI and NB Name Searches

An Ontario company can be incorporated with any name which is different in any regard, even if it is only a few letters in the name. A federal company differs however because when the federal government reviews articles of incorporation together with a Canada NUANS it will not allow any name which is similar to another company in many regards. When you are submitting incorporation documents for a federal company ensure your name is as different as possible from any other company name being used in Canada. Be prepared that the government may also disallow your proposed name if it sounds the same as another existing company even if the spelling is substantially different. You should be prepared that your name might not be accepted. Each time you submit articles for review you will need to submit a new NUANS report. If the first name you pick is too close to others on record, then you will have to buy another federal NUANS and submit again. A qualified search house will be able to assist you with having a better chance of your NUANS report being accepted the first time. Resources for Canadian Business Owners has experience in having proposed names accepted even after they have been rejected. However, some times additional searches must be performed to rule out conflicting companies and there can be an additional cost here. It is possible to obtain an advance Name Decision report from Industry Canada before you submit your articles for filing. Resources for Canadian Business Owners will be glad to submit a request for a Name Decision for your federal incorporation. This will also include as many preliminary name searches as you require without further cost. We are experienced in reviewing preliminary name search results through the NUANS system to help increase your chances of being accepted the first time round when you are submitting articles of incorporation for companies in the federal jurisdiction.

Why Does It Matter if I use a Name Similar to a Name in Another Province

It may seem that if you are registering a company in Ontario and another company in the Northwest Territories has a similar name, that this should not be a problem. With technology as it is today, companies are conducting business across Canada, if not across the World. You will have no idea whether the company with the name that you are proposing may at some time in the future be conducting business in the very province you wish to register in and then there would be a conflict. Further, the Canadian government provides that any company that is registered in any province or territory in Canada can apply to be registered to carry on business in another province or territory. It is therefore very important that your proposed name is distinct and descriptive. This is called an extra-provincial registration.

Is a NUANS Report Required for a Business Name or Sole Proprietorship Registration

A NUANS Report is not required in Ontario and Alberta, and some other provinces when registering business names, sole proprietorships and partnerships. In Ontario and Alberta anyone can register the exact same business name or sole proprietorship as one registered already. However, it is advisable that you do a preliminary NUANS name search before you register to ensure no one else is using the name regardless. This is the one time when you should pay for a preliminary name search for your business name. There is no need to purchase a full NUANS report or other name search report for a business name, sole proprietorship or partnership being registered in Alberta and Ontario. All that is required is to do a preliminary name search just to ensure you are picking a name that is different. It is always advisable not to use a name that is too similar to another name since this would be a conflict for your business in the long run. Some business names such as “Bell Canada” have a high standing in the marketplace because of the number of years the name has been registered and the number of people who know the name.

You should be aware that there is no such thing as a Federal Business Name registration, Federal partnership registration or Federal Sole Proprietorship registration. Business names, partnerships and sole proprietorships are governed by the provincial and territorial jurisdictions in Canada.

What is a Preliminary NUAN Name Search

If you purchase a NUANS Name Search Report and the name you wish to use for your incorporation is on the report as registered for another company or business, you will not be allowed to incorporate with that name. It is therefore important that you do a preliminary NUANS name search first in order to ensure before hand that the name is free. Otherwise, if you do not first ensure a pre-check of the name is done and you order a full NUANS report or other form of name search report, your registration could be rejected if the name is too similar or the same as another name registered.

Please note however that preliminary NUANS Name Searches are not fool proof and there is always a chance a conflict will show up on the full NUANS Name Search or other name search report that did not come up during the Preliminary NUANS Name Search.

You can keep buying full NUANS Name Search reports but it will become costly. It is better that you check the name first with a Preliminary NUANS Name search. Resources for Canadian Business Owners provides FREE UNLIMITED preliminary name searches with the purchase of a NUANS or Name Search Report. We will make great efforts to pre-clear your name in advance so that the odds of your proposed name being rejected are reduced.

How do I Arrange to have a Preliminary Name Search

Resources for Canadian Business Owners Inc. will do as many preliminary Name Searches as you wish with the purchase of a full NUANS Name Search or other Name Search Report. If you are not required to submit a name search report with your registration Resources for Canadian Business Owners will be glad to perform a preliminary name search for you at a nominal fee. This service should only be used when a name search report is NOT required

How Long Does it Take to Get a Name Search or NUANS Report

If you are ordering a report from a province or territory that does not accept a NUANS report, it can take a few days to a week to obtain the report. If you are ordering a NUANS name search report, it takes from 40 minutes to three hours to obtain a NUANS Name Search Report. Once you order a NUANS report a confirmation email will be sent to you to let you know that we have received your request. Depending on the number of searches requested at that time it might take us 40 minutes or three hours. Be assured though you will receive the NUANS in the same day whether you order it at 6:00 a.m. in the morning or 10:00 p.m. at night. Frequently we have someone close to the computer for most of the day right up until late evening so feel free to contact us at any time of the day. We are open 7 days a week. We look forward to serving you.

How Long is a Name Search or NUANS Report in effect.

A NUANS name search report will be in effect for 90 days from the date of issue. If yuou do not use the report until after that time you will be required to order a new one and most other name search reports are also effective for a similar length period.

Name Searches for Non-Profit Corporations and Charities

We can provide you with information about registered companies, partnerships, sole proprietorships or operating trade names on the public record throughout Canada including extensive due diligence searching and reporting.

We also provide registration services for Canadian companies, sole proprietorships, partnerships and operating trade names in the provinces and territories of Canada.

Our staff has over 30 years’ experience in corporate law and we will be glad to answer your questions. We take pride in our work and will provide you with the best, fastest, accurate and reasonably priced service available.

Depending on the province or territory you wish to incorporate your non-profit corporation will depend on the type of name report that you get. There is no difference between a name search report for a not for profit corporation or charitable corporation and a share corporation. It is the province or territory that governs the report you get.

For instance, a name search report for a share company being incorporated in Ontario is the same report given to a non profit or charity corporation wishing to incorporate in Ontario, being an Ontario NUANS name search report.

NUANS Search Houses are trained on the best method of performing Preliminary NUANS Name Search reports in order to ensure that the most conflicts to your proposed names can be found prior to ordering a full NUANS Name Search Report.

If you incorporate a numbered company a NUANS name search report will not be required since the government will provide you with the next number in line. An example of a numbered Ontario company would be a corporation having a name such as 9999999 Ontario Inc.

A numbered federal company might be a corporation with a name called 9999999 Canada Inc. and an Alberta numbered company might be 2244444 Alberta Ltd. The numbers are given out consecutively. You cannot choose the number for your company.

13 Feb 2016

Qualifications for Directors of Ontario Companies

by Holly Crosgrey | posted in: Directors, Incorporating in Ontario, Incorporation, Maintaining Your Company, Ontario, Ontario Business Corporations Act | 0

A director is an individual who is elected by the shareholders (owners) of the company to assist with the management and supervision of the day to day affairs of the company. Frequently the directors of a company are also the owners of the company. Not just anyone can be a director of an Ontario company. In order to meet the qualifications for directors of Ontario companies reference must be made to the statute that governs Ontario companies.

How many directors can an Ontario Company Have

Ontario companies must have at least one director for private companies and at least three directors for public companies. There is no limit on the number of directors an Ontario company may have and if a private company wishes to have many directors it may do so.

Who can Qualify to Act as a Director of an Ontario Company

The Business Corporations Act (Ontario) explains this requirement by outlining what disqualifies someone from being a director of an Ontario company.

The following persons are disqualified from being directors of an Ontario company:

1. A person who is less than 18 years of age;

A person who has been found under the Substitute Decisions Act, 1992 (Ontario) or under the Mental Health Act (Ontario) to be incapable of managing property or who has been found to be incapable by a court of Canada or elsewhere;
A person who is not an individual; or
A person who has the status of bankrupt.

Director’s Consent to Act as a Director

A person cannot be appointed to be a director of an Ontario company unless that person has agreed to do so. The Act provides that after an individual is elected as a director they must consent in writing to the appointment within ten days. This written consent is inserted into the minute book for the Ontario company and maintained there for future reference.

Resident Canadian Requirement for Directors of Ontario Companies

There is a requirement for 25% of the directors of an Ontario company to be “resident Canadians”. For more information about this requirement refer to Resident Canadian Requirements for Directors of Ontario Companies.

13 Feb 2016

Appointing Officers

by Holly Crosgrey | posted in: AB Business Corporations Act, BC Business Corporations Act, Canada Business Corporations Act, Directors Resolutions, General Corporate Law, Maintaining Your Company, MB Corporations Act, officers, Ontario Business Corporations Act, The Business Corporations Act (Saskatchewan) | 0

This article will provide guidance on how to appoint officers of a Corporation and how resignations and removal of officers are documented.

The directors of a corporation manage the affairs of the corporation. As part of that management the directors are responsible for appointing officers to assist them with their duties.

Directors can appoint officers at a meeting or a resolution can be signed by all of the directors appointing officers. For more guidance on preparing resolutions refer to directors resolutions. For guidelines on how directors can go about appointing officers at a meeting refer to directors meetings.

The statute of incorporation and the by-laws of a corporation will govern the manner in which officers can be appointed, removed or resign.

Appointing Officers

The directors initially approve the officers of the Corporation upon incorporation or each year at the annual meeting (see below for more information on annual resolutions/meetings).

An example of a resolution appointing officers is as follows:

2-Appointment-of-Officers

Resignation of Officers

When an officer wishes to discontinue working with a company, that person will resign as an officer from the position he or she is holding. See an example of a resignation of an officer below:

1-Resignation-of-Officer

Once a resignation has been received by the directors of a corporation, they will need to decide whether they wish to appoint another officer to replace the person resigning. Depending on the type of position, it may not be necessary to appoint a replacement. In situations where the directors wish to appoint a replacement officer, they will prepare a resolution in the form below:

3-DR-Resigning-Officer

Remove an Officer

The general operating by-law provides the manner in which an officer may be removed. The directors of a corporation will approve a resolution to remove the officer and appoint a replacement to that position. Below is an example of this form of resolution:

4-DR-Removing-an-Officer

Annual Resolutions

Each year a company must approve certain matters. Officers may be excluded from appointment and new ones brought on at this time without being removed or resigning. For more information these approvals see annual resolutions.

For more information about officers titles refer to Officers Titles.

Notice of Change

Most jurisdictions will provide in the governing statute that a notice of change must be filed to update the government’s database with respect to changes in officers and directors. In many cases this can be done online using a company that has access to the databases or a paper filing can be done. Paper filings are not as reliable but in most cases they are free to file.

Statute Reference:

Business Corporations Act (Ontario)

“1(1) “officer” means an officer designated under section 133 and includes the chair of the board of directors, a vice-chair of the board of directors, the president, a vice-president, the secretary, an assistant secretary, the treasurer, an assistant treasurer and the general manager of a corporation, and any other individual designated an officer of a corporation by by-law or by resolution of the directors or any other individual who performs functions for a corporation similar to those normally performed by an individual occupying any such office;

“senior officer” means,

(a) the chair of the board of directors, a vice-chair of the board of directors, the president, a vice-president, the secretary, the treasurer or the general manager of a corporation or any other individual who performs functions for a corporation similar to those normally performed by an individual occupying any such office, and

(b) each of the five highest paid employees of a corporation, including any individual referred to in clause (a);”

“117. (1) After incorporation, a meeting of the directors of a corporation shall be held at which the directors may,… (d) appoint officers;”

“127. (1) Subject to the articles or by-laws, directors of a corporation may appoint from their number a managing director or a committee of directors and delegate to such managing director or committee any of the powers of the directors. 2006, c. 34, Sched. B, s. 21 (1).”

Canada Business Corporations Act

“2(1) “officer” means an individual appointed as an officer under section 121, the chairperson of the board of directors, the president, a vice-president, the secretary, the treasurer, the comptroller, the general counsel, the general manager, a managing director, of a corporation, or any other individual who performs functions for a corporation similar to those normally performed by an individual occupying any of those offices;”

“104 (1) After issue of the certificate of incorporation, a meeting of the directors of the corporation shall be held at which the directors may…..(d) appoint officers;”

Business Corporations Act (Alberta)

“121. Subject to the articles, the bylaws or any unanimous shareholder agreement, (a) the directors may designate the offices of the corporation, appoint as officers individuals of full capacity, specify their duties and delegate to them powers to manage the business and affairs of the corporation, except powers to do anything referred to in section 115(3), (b) a director may be appointed to any office of the corporation, and (c) 2 or more offices of the corporation may be held by the same person.”

Business Corporations Act (British Columbia)

“141 (1) Subject to subsection (3) and to the memorandum and articles of a company, the directors may appoint officers and may specify their duties.

(2) Unless the memorandum or articles provide otherwise,

(a) any individual, including a director, may be appointed to any office of the company, and

(b) 2 or more offices of the company may be held by the same individual.

(3) An individual who is not qualified under section 124 to become or act as a director of a company is not qualified to become or act as an officer of the company.

(4) Unless the memorandum or articles provide otherwise, the directors may remove any officer.

(5) The removal of an officer is without prejudice to the officer’s contractual rights or rights under law, but the appointment of an officer does not of itself create any contractual rights.”

The Business Corporations Act (Saskatchwan)

“116 Subject to the articles, the bylaws or any unanimous shareholder agreement: (a) the directors may designate the offices of the corporation, appoint as officers persons of full capacity, specify their duties and delegate to them powers to manage the business and affairs of the corporation, except powers to do anything referred to in subsection (3) of section 110; (b) a director may be appointed to any office of the corporation; and (c) two or more offices of the corporation may be held by the same person.”

The Corporations Act (Manitoba)

“99(1). After the issue of the certificate of incorporation, a meeting of the directors of the corporation shall be held at which the directors may…..(d) appoint officers;”

By-law Provisions Regarding Officers

An example of a clause in a general operating by-law which governs how officers are appointed is as follows:

“Appointment – The board may from time to time designate the offices of the Corporation, appoint officers (and assistants to officers), specify their duties and, subject to the Act or the provisions of any unanimous shareholder agreement, delegate to such officers powers to manage the business and affairs of the Corporation. A director may be appointed to any office of the Corporation. Except for the chairman of the board and the managing director, an officer may but need not be a director. Two or more offices may be held by the same person.”

An example of a clause in a by-law which provides for the removal or resignation of an officer is as follows:

“ Term of Office (Removal) – In the absence of a written agreement to the contrary, the board may remove, whether for cause or without cause, any officer of the Corporation. Unless so removed, an officer shall hold office until his successor is appointed or until his resignation, whichever shall first occur.”

13 Feb 2016

Resident Canadian Requirement for Directors of Ontario Companies

by Holly Crosgrey | posted in: Directors, Incorporating in Ontario, Incorporation, Maintaining Your Company, Ontario, Ontario Business Corporations Act | 0

All Ontario companies must have at least one director and this person must be a resident Canadian as defined in the Business Corporations Act (Ontario). Director(s) are the individuals who manage and supervise the business on behalf of the owners (shareholders). The directors will also appoint officers to assist.

The Business Corporations Act (Ontario) provides for a residency requirement for directors. 25% of the directors of an Ontario company must be “resident Canadians” as defined by the Act. This means that if an Ontario company has one to four directors, at least one of them must be a resident Canadian.

Definition of Resident Canadian

A resident Canadian is defined in the Act as an individual who is (a) a Canadian citizen ordinarily resident in Canada, (b) a Canadian citizen not ordinarily resident in Canada who is a member of a prescribed class of persons, or (c) a permanent resident within the meaning of the Immigration and Refugee Protection Act (Canada) and ordinarily resident in Canada.

Meaning of the Definition of Resident Canadian

In lay terms, to be considered a “resident Canadian” pursuant to the Act, you must be a Canadian citizen living in Canada or a permanent resident living in Canada. Therefore, if you are a Canadian citizen not living in Canada you would not qualify to be the sole director of a company, however, you could be a director as long as there were other directors elected to the board meeting the 25% resident Canadian requirement. As well, a non-Canadian may not be the sole director of a company.

On the other hand, not all provinces and territories have the same rules. In British Columbia the Business Corporations Act (British Columbia) does not provide for a residency requirement. Therefore a non-Canadian or a Canadian citizen not living in Canada may be the sole director of a BC company. This is good news for those Canadians who wish to conduct business in Canada but also wish to live outside of Canada. As well, foreign individuals are able to set up BC companies and act as the sole director of those companies since there is no requirement for them to live in Canada. Refer to our blog page for more information about residency requirements for BC companies.

13 Feb 2016

Resolutions for Ontario Companies – Directors Resolutions | Shareholders Resolutions

by Holly Crosgrey | posted in: Incorporating in Ontario, Incorporation, Maintaining Your Company, Ontario, Ontario Business Corporations Act | 0

Resolutions for Ontario companies are governed pursuant to the Ontario Business Corporations Act.

What is a Resolution

A resolution is a form of approval. It can be to approve any matter that the corporation wishes. Some examples are approval of the change of registered office address of a company, approval to amend the articles of a company, approval to enact by-laws of a company, etc.

Resolutions are Approved by Directors or Shareholders

In some cases, certain matters must be approved by the directors and in other cases it may be that shareholder approval is required. For instance if the company wishes to change its name from one alpha name to another alpha name the shareholders must approve this change before it can be implemented. If a company wishes to enter into an agreement, the directors would approve the matter. In some cases, both directors and shareholders may need to approve a resolution.

How Are Directors Resolutions and Shareholders Resolutions Approved

Resolutions can be approved at meetings of the directors or shareholders, pursuant to which every director/shareholder has been given notice of the meeting, and for which at least a quorum of those directors/shareholders showed up for the meeting. (i.e. the minimum number of directors/shareholders that can form a quorum is outlined in the company’s by-law and frequently is a majority).

Resolutions can also be approved without holding a meeting as long as all of the directors or shareholders, as the case may be, sign and approve a written resolution.

What Types of Resolutions are There

There are three types of resolutions:

Directors Resolution – This is a resolution that is either (a) passed by a quorum of directors at a meeting held to approve it, or (b) a resolution in writing signed by all of the directors.

Shareholders Resolution – This is a resolution that is either (a) passed by a quorum of shareholders at a meeting held to approve it, or (b) a resolution in writing signed by all of the shareholders entitled to vote.

Special Resolution – A special resolution means a resolution that is (a) submitted to a special meeting of the shareholders of a company duly called for the purpose of considering the resolution and passed by at least 2/3rds of the votes cast at the meeting, or (b) consented to in writing by each shareholder of the company entitled to vote.

What Does a Resolution Look Like

We have included an example of a resolution on this page. There is always a heading on the resolution and a footer which shows the signatures.

The Heading should say either (a) Resolution of the Directors, or (b) Resolution of the Shareholders, or (c) Special Resolution as the case may be.

The footer should reference that all of the directors or shareholders are signing and the name of the statute that they are relying upon.

How do You Know Whether the Directors or Shareholders Must Approve a Particular Matter

The Ontario Business Corporations Act is online and can be searched to find out what type of approval you need for a matter. For instance, let us say that you are changing the directors of a company by increasing the number. If you search “number of directors” you will find section 125(3) which indicates that the number of directors is determined by special resolution.

12 Feb 2016

Ontario Operating By-Law – Enactment, Amendment and Repeal pursuant to the Business Corporations Act

by Holly Crosgrey | posted in: By-laws, Incorporating in Ontario, Incorporation, Ontario, Ontario Business Corporations Act | 0

What are by-laws?

By-laws are the rules pursuant to which a corporation conducts business. Many of those rules will be the same as outlined in the statute governing the company. However, in some cases the statute may provide that the by-laws can override certain standard statute provisions. Ontario operating by-laws are the main rules for the corporation.

Ontario Operating By-law

The Ontario operating by-law is the first by-law to be enacted by a company upon incorporation and every company must have an operating by-law. The rules outlined in the operating by-law are with respect to the number of directors, directors’ duties and meeting requirements, the appointment of officers and the rules relating to shareholders including meeting requirements, how many shareholders must be in attendance for it to be a valid meeting, etc. These are just a few of the provisions outlined in a standard Ontario operating by-law.

Section 116 of the Business Corporations Act (Ontario) provides the following statute requirements respecting Ontario by-laws for corporations:

“(1) Unless the articles, the by-laws or a unanimous shareholders agreement otherwise provide, the directors may, by resolution, make, amend or repeal any by-laws that regulate the business or affairs of a corporation.

(2) Where the directors make, amend or repeal a by-law under subsection (1), they shall submit the by-law amendment or repeal to the shareholders at the next meeting of shareholders, and the shareholders may confirm, reject or amend the by-law, amendment or repeal.

(3) Where a by-law is made, amended or repealed under subsection (1), the by-law, amendment or repeal is effective from the date of the resolution of the directors until it is confirmed, confirmed as amended or rejected by the shareholders under subsection (2) or until it ceases to be effective under subsection (4) and, where the by-law is confirmed or confirmed as amended, it continues in effect in the form in which it was so confirmed.

(4) If a by-law or an amendment or repeal of a by-law is rejected by the shareholders, or if the directors do not submit the by-law, amendment or repeal to the shareholders as required under subsection (2), the by-law, amendment or repeal ceases to be effective on the date of such rejection or on the date of the meeting of shareholders at which it should have been submitted, as the case may be, and no subsequent resolution of the directors to make, amend or repeal a by-law having substantially the same purpose or effect is effective until it is confirmed or confirmed as amended by the shareholders.”

Amending or Repealing a By-Law

If the officers of an Ontario company wish to amend an Ontario operating by-law or another by-law, which has been approved by the directors and shareholders, the manner in which to approve the amendment to the by-law is to create a new by-law providing for the amendment. For instance the officers will create a new by-law no. 2 which repeals all or certain sections of operating by-law no. 1, and includes the new replacement sections to be approved. The officers would present by-law no. 2, being an amendment to by-law no. 1, to the directors for approval. If the directors approve the by-law then the directors shall present the by-law to the shareholders for approval at the very next meeting of the shareholders.

Approving a By-law

When the directors approve a by-law it is said that the by-law has been “enacted by the directors” and the shareholders of the company are said to have “confirmed the by-law”. All directors and shareholders of a corporation must have an opportunity to review the by-law and approve it for the by-law, amendment or repeal to be considered to be properly approved in accordance with the requirements under the Business Corporations Act (Ontario).

Need a By-law? Purchase a Microsoft Word Version of By-law No. 1.

12 Feb 2016

Registration Requirements for Ontario Operating Trade Names

by Holly Crosgrey | posted in: Incorporating in Ontario, Incorporation, Ontario, Ontario Business Names Act, Operating Trade Name | 0

This article is about the requirement under the Business Names Act (Ontario) for a company to register under the Business Names Act when it operates under a name other than its corporate name – known as an Ontario operating trade name.

The statute indicates in section 2 that no corporation shall carry on business or identify itself to the public under a name other than its corporate name unless that name is registered by the corporation.

Register an Operating Trade Name

This legal requirement is frequently not followed correctly by small business corporations. Let us take the example of a person who incorporates a company called Trewell Landscaping Inc. He incorporates his company and wants to put a sign up on his door for the name “Trewell Landscaping”.

This is not the full name of the company and Trewell Landscaping Inc. is therefore operating under a name other than its corporate name and is in violation of the Business Names Act.

The owner of Trewell Landscaping thinks that because his corporate name and his business name are similar, that a registration is not required. However, by virtue of the owner putting up a sign on his door called Trewell Landscaping he is in violation of the legal requirements under the Business Names Act.

The owner of Trewell Landscaping Inc. has two options. He can register an operating trade name called “Trewell Landscaping” and obtain a Master Business License for this name. This would mean that Trewell Landscaping Inc. would then be legally operating under the trade name “Trewell Landscaping” and the above sign is completely correct and legal.

If he does not wish to incur any further expense he can include the word “Inc.” at the end of the name “Trewell Landscaping” in very small letters after the name on his sign.

Resources for Canadian Business Owners would be glad to assist you If you require the registration of an Ontario operating trade name on behalf of your company to help you stay in compliance with the Ontario Business Names Act.

Below is an example of the Master Business Licence that is issued by the Ontario Ministry of Government Services when a company registers a business name. This example illustrates how the name is registered without the “Inc.” in the name which allows the corporation to now operate under Trewell Landscaping.

31 Jan 2016

Annual Resolutions

by Holly Crosgrey | posted in: Annual Resolutions, Canada Business Corporations Act, Directors, Directors Resolutions, Federal, Financial Statements, General Corporate Law, Maintaining Your Company, Ontario, Ontario Business Corporations Act, Shareholder Resolutions | 0

This Article will be specific to the annual corporate approvals (frequently called annuals or annual resolutions) required for companies incorporated pursuant to the Business Corporations Act (Ontario) and the Canada Business Corporations Act. Most other jurisdictions in Canada would have the same or similar requirements.

In order to document these approvals a series of resolutions are prepared and signed by the directors and shareholders of the company. Below is a breakdown of each document that is normally prepared and approved.

For more information about the rules of preparing and signing resolutions refer to Preparing Resolutions.[margin_30t]

Annual Resolutions can also be approved a meetings of the directors and shareholders and public companies will hold meetings each year to approve annual resolutions.

Purchase a Word Version Version of Annual Resolutions

Purchase Word Versions of Dividend Approval Resolutions

Approval of Financial Statements by Directors

All Canadian companies are required to file a federal tax return each year and as part of that procedure financial statements are prepared by the accountant of the Corporation.

As part of the annual resolutions, the directors of the Corporation must (a) approve the financial statements, (b) approve the directors executing the financial statements; and (3) approve the financial statements being shown to the shareholders. Below is a form of resolution that handles all three of these approvals:

Statute Reference:

Business Corporations Act (Ontario)

“Section 155. The financial statements required under this Act shall be prepared as prescribed by regulation and in accordance with generally accepted accounting principles. R.S.O. 1990, c. B.16, s. 155.”

“Section 159. (1) The financial statements shall be approved by the board of directors and the approval shall be evidenced by the signature at the foot of the balance sheet of any director authorized to sign and the auditor’s report, unless the corporation is exempt under section 148, shall be attached to or accompany the financial statements. R.S.O. 1990, c. B.16, s. 159 (1); 2010, c. 16, Sched. 5, s. 1 (2).”

Note: An offering corporation is a public corporation. Financial statements of public corporations must be audited. The above paragraph is referring to non-offering corporations, which are private corporations, and have an option to be audited or unaudited.

Canada Business Corporations Act

“Section 158 (1) The directors of a corporation shall approve the financial statements referred to in section 155 and the approval shall be evidenced by the manual signature of one or more directors or a facsimile of the signatures reproduced in the statements.”[margin_30t]

Acceptance of Financial Statements by Shareholders

Once the directors have approved the financial statements they are mandated to provide the shareholders with a copy of the financial statements. Below is an example of a shareholders resolution acknowledging receipt of the financial statements:

Statute Reference:

Business Corporations Act (Ontario)

“Section 154. (1) The directors shall place before each annual meeting of shareholders,….(a) in the case of a corporation that is not an offering corporation, financial statements for the period that began on the date the corporation came into existence and ended not more than six months before the annual meeting or, if the corporation has completed a financial year, the period that began immediately after the end of the last completed financial year and ended not more than six months before the annual meeting;”

Canada Business Corporations Act

“Section 155 (1) Subject to section 156, the directors of a corporation shall place before the shareholders at every annual meeting (a) comparative financial statements as prescribed relating separately to (i) the period that began on the date the corporation came into existence and ended not more than six months before the annual meeting or, if the corporation has completed a financial year, the period that began immediately after the end of the last completed financial year and ended not more than six months before the annual meeting, and (ii) the immediately preceding financial year;”[margin_30t]

Election of Directors by Shareholders

The shareholders of the Corporation will elect the directors of the Corporation for the next year as part of the annual resolutions. Even if the directors are not changing a resolution should be prepared to elect the directors. If this resolution is not approved the current directors would still hold office.

Statute Reference:

Business Corporations Act (Ontario)

“Section 119 (4) Subject to clause 120 (a), shareholders of a corporation shall elect, at the first meeting of shareholders and at each succeeding annual meeting at which an election of directors is required, directors to hold office for a term expiring not later than the close of the third annual meeting of shareholders following the election. R.S.O. 1990, c. B.16, s. 119 (4).”

Canada Business Corporations Act

“Section 106(3) Subject to paragraph 107(b), shareholders of a corporation shall, by ordinary resolution at the first meeting of shareholders and at each succeeding annual meeting at which an election of directors is required, elect directors to hold office for a term expiring not later than the close of the third annual meeting of shareholders following the election.”[margin_30t]

Consent to Act as a Director

Every director who is elected or appointed must consent to act as a director of the Corporation and agree in writing to act. A consent to act is only required to be provided once during the term of appointment, however, customarily these consents are included in the annual resolutions package.

25% of the directors must be resident Canadians and the consent confirms the residency.

The statute also provides that directors can hold meetings by electronic means provided the directors consent to such meetings.

Not just anyone can be a director of a corporation. Refer to Qualifications of Directors of Federal Companies and Qualifications of Directors of Ontario Companies for more information.[margin_15t]

Statute Reference:

Business Corporations Act (Ontario)

“Section 1(1) “resident Canadian” means an individual who is,

(a) a Canadian citizen ordinarily resident in Canada,

(b) a Canadian citizen not ordinarily resident in Canada who is a member of a prescribed class of persons, or

(c) a permanent resident within the meaning of the Immigration Act (Canada) and ordinarily resident in Canada;”

“Section 118(3) At least 25 per cent of the directors of a corporation other than a non-resident corporation shall be resident Canadians, but where a corporation has less than four directors, at least one director shall be a resident Canadian. 2006, c. 34, Sched. B, s. 19 (2).”

“Section 119(9) Subject to subsection (10), the election or appointment of a director under this Act is not effective unless the person elected or appointed consents in writing before or within 10 days after the date of the election or appointment. 1999, c. 12, Sched. F, s. 8.”

“Section 119(10) If the person elected or appointed consents in writing after the time period mentioned in subsection (9), the election or appointment is valid. 1999, c. 12, Sched. F, s. 8.”

“Section 119(11) Subsection (9) does not apply to a director who is re-elected or re-appointed where there is no break in the director’s term of office. 1999, c. 12, Sched. F, s. 8.”

“Section 126(13) Unless the by-laws otherwise provide, if all the directors of a corporation present at or participating in the meeting consent, a meeting of directors or of a committee of directors may be held by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and a director participating in such a meeting by such means is deemed for the purposes of this Act to be present at that meeting. R.S.O. 1990, c. B.16, s. 126 (13).”

Canada Business Corporations Act

“Section 2(1) resident Canadian means an individual who is (a) a Canadian citizen ordinarily resident in Canada, (b) a Canadian citizen not ordinarily resident in Canada who is a member of a prescribed class of persons, or (c) a permanent resident within the meaning of subsection 2(1) of the Immigration and Refugee Protection Act and ordinarily resident in Canada, except a permanent resident who has been ordinarily resident in Canada for more than one year after the time at which he or she first became eligible to apply for Canadian citizenship;”

“Section 106(9) An individual who is elected or appointed to hold office as a director is not a director and is deemed not to have been elected or appointed to hold office as a director unless (a) he or she was present at the meeting when the election or appointment took place and he or she did not refuse to hold office as a director; or (b) he or she was not present at the meeting when the election or appointment took place and (i) he or she consented to hold office as a director in writing before the election or appointment or within ten days after it, or (ii) he or she has acted as a director pursuant to the election or appointment.”

“Section 114(9) Subject to the by-laws, a director may, in accordance with the regulations, if any, and if all the directors of the corporation consent, participate in a meeting of directors or of a committee of directors by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting. A director participating in such a meeting by such means is deemed for the purposes of this Act to be present at that meeting.”[margin_30t]

Appointment of Officers by Directors

The directors elected at the annual meeting or by annual resolutions will then appoint the officers they wish to assist them for the next year. It can be the same officers as in the previous year. The form of approval is as follows:

Statute Reference:

Business Corporations Act (Ontario

“Section 133. Subject to the articles, the by-laws or any unanimous shareholder agreement, (a) the directors may designate the offices of the corporation, appoint officers, specify their duties and delegate to them powers to manage the business and affairs of the corporation, except, subject to section 184, powers to do anything referred to in subsection 127 (3); (b) a director may be appointed to any office of the corporation; and (c) two or more offices of the corporation may be held by the same person.”

Canada Business Corporations Act

“Section 121 Subject to the articles, the by-laws or any unanimous shareholder agreement, (a) the directors may designate the offices of the corporation, appoint as officers persons of full capacity, specify their duties and delegate to them powers to manage the business and affairs of the corporation, except powers to do anything referred to in subsection 115(3); (b) a director may be appointed to any office of the corporation; and (c) two or more offices of the corporation may be held by the same person.”[margin_30t]

Appointment of Accountant or Auditor

The shareholders of a Corporation will either appoint an accountant or appoint an auditor for the ensuing year. Below is the form of resolution that can be modified for either situation.

Statute Reference:

Business Corporations Act (Ontario)

“Section 149(2) The shareholders shall at each annual meeting appoint one or more auditors to hold office until the close of the next annual meeting and, if an appointment is not so made, the auditor in office continues in office until a successor is appointed. R.S.O. 1990, c. B.16, s. 149 (2).”

“Section 149(7) The remuneration of an auditor appointed by the shareholders shall be fixed by the shareholders, or by the directors if they are authorized so to do by the shareholders, and the remuneration of an auditor appointed by the directors shall be fixed by the directors. R.S.O. 1990, c. B.16, s. 149 (7).”

Canada Business Corporations Act

“Section 162 (1) Subject to section 163, shareholders of a corporation shall, by ordinary resolution, at the first annual meeting of shareholders and at each succeeding annual meeting, appoint an auditor to hold office until the close of the next annual meeting.”

“Section 162(4) The remuneration of an auditor may be fixed by ordinary resolution of the shareholders or, if not so fixed, may be fixed by the directors. 1974-75-76, c. 33, s. 156; 1978-79, c. 9, ss. 1(F), 4″[margin_30t]

Consent to Non-Appointment of An Auditor

Most companies do not have their financial statements audited by an auditor. Instead they have financial statements prepared by an accountant. In those cases, the shareholders of the Corporation must approve the non-appointment of an auditor. This approval requires the consent of all of the voting and non-voting shareholders as follows:[margin_15t]

Statute Reference:

Business Corporations Act (Ontario)

Section 148. In respect of a financial year of a corporation, the corporation is exempt from the requirements of this Part regarding the appointment and duties of an auditor if, (a) the corporation is not an offering corporation; and (b) all of the shareholders consent in writing to the exemption in respect of that year. 1998, c. 18, Sched. E, s. 23.

Canada Business Corporations Act

Section 163 (1) The shareholders of a corporation that is not a distributing corporation may resolve not to appoint an auditor. 163 (2) A resolution under subsection (1) is valid only until the next succeeding annual meeting of shareholders. (3) A resolution under subsection (1) is not valid unless it is consented to by all the shareholders, including shareholders not otherwise entitled to vote.

Note: Reference to distributing corporation is another way of saying public corporation.

Appointment of Auditor

In the case where an auditor is being appointed for an upcoming financial year of the Corporation, the auditor should receive notice of its appointment as follows:[margin_20t]

Statute Reference:

Business Corporations Act (Ontario)

Section 149 (9) The corporation shall give notice in writing to an auditor of the auditor’s appointment forthwith after the appointment is made. R.S.O. 1990, c. B.16, s. 149 (9).

Canada Business Corporations Act

Silent

When Should Annual Resolutions Be Approved

The financial statements of a Corporation must be finalized and incorporated into the corporate tax return for the company within six months of the end of the financial year. Therefore, the annual resolutions cannot be dated prior to the financial statements being prepared and no later than six months after the financial year end.

Declaration of Dividends

As part of the preparation and approval of annual resolutions frequently dividends will be declared. For more information about how to approve a dividend refer to Declaring a Dividend.

27 Nov 2015

Ontario Personal Property Security Registration & Search

by Holly Crosgrey | posted in: Due Diligence, Ontario, Ontario Personal Property Security Act, Personal Property Security Registration | 0

The Ontario Personal Property Security Registration (PPSR) System is a notice filing system that records and provides information concerning consumer and business loans where goods and other personal property are used as collateral to secure loans. The PPSR System is a provincial system and each province and territory would have its own PPSR System.

For example, a person (“Borrower”) buys a large screen TV and borrows money from a loan company (the “Lender”) to pay for the TV. The Borrower and the Lender enter into an agreement giving the Lender the rights to the TV until such time as the Borrower has paid the money back to the Lender. The Lender would register a Personal Property Security Registration against the Borrower to secure its loan to the Borrower.

Who Should Register in the Ontario Personal Property Security Registration System

Persons involved in one of two types of transactions would make a registration in the Ontario Personal Property Security Registration System: (1) Creditors who secure payment of a debt by taking a security interest in the personal property of the debtor should register a financing statement under the Personal Property Security Act (Ontario) (frequently referred to as the “PPSA”); or (2) persons who repair or store an article and who, prior to receiving full payment give up possession of that article, should register a claim for lien under the Repair and Storage Liens Act (frequently referred to as the “RSLA”).

Registering in the PPSR System helps to establish priorities between individuals with competing interests in the same personal property, and in the case of a claim for lien will ensure that the non-possessory lien is enforceable against third parties. Information is kept current through the registration of a financing change statement. For instance if any information changes about the property, the lender or the borrower, a financing change statement can be filed to update the information.

What is the Registration Process

Lenders and borrowers must enter into what are called “security agreements”. The Lender registers a notice of the agreement in the PPSR System. This is done by completing and submitting a document electronically called a financing statement. This must be done by an online service such as a search house. This registration is done by the Lender because it is the Lender who wants to protect its interest in the security.

The information is then recorded on the PPSR System and remains there until such time as the PPSA registration has been discharged by the Lender.

It is not just loan companies that can register a PPSA. If you have loaned money to a person you can have this individual sign a promissory note or a security agreement and you can then register a PPSA financing statement against that individual. You do not have to have a solicitor prepare this document for you but it is always the best route.

What Information is Included in the PPSA Financing Statement

In the case of a consumer car loan this would include the borrower’s name, address and date of birth, the lender’s name and business address, the registration period, classification of the collateral as consumer goods, initial amount of the loan, maturity date and description of the car including motor vehicle identification number (VIN).

Even though only a summary of the information can be registered, it is important to have complete information. For instance, having the first name, middle name and last name of the debtor is better than just the first and second name. Consider the name “John Smith” which is very common. If you were to do a search of this name through the PPSR System you would get results for more than one person. However, if you register the name “John Abbot Smith” the search results would be more narrow. Including the date of birth is another way of ensuring specific information about the debtor. Further describing the security is important. For instance, describing the security as a TV would not be as good as saying that it is a Sony 30 inch flat screen TV with Serial Number: 29845. There is a box on the form which will allow you to put in a description of the security which is 2 or 3 lines long. Take advantage of this opportunity.

How Long is the Information Retained in the PPSR System

Lenders must select the time period for the registration. Business loans may be registered for as long as 25 years, or for a perpetual period. The longer the time period, the more money it is to register a PPSA. In the case of consumer loans, lenders can register only for up to five years at a time but the PPSA registration can be renewed for a further five years. The onus would be on the lender to ensure it re-registers at the appropriate time.

How Does a PPSA Registration Become Discharged

When the consumer loan is repaid the lender is required to register a “discharge” within 30 days. Frequently this is not done so if you are the borrower you should ensure that this is done on your behalf by the lender.

Even if the borrower has paid the lender all of the money that he or she owes to the lender, the borrower should not discharge the PPSA registration on his or her own. The borrower should contact the lender and request that the PPSA registration be discharged.

What Should You Do if the Lender Does not Discharge the PPSA Registration After All Payments Have Been Made

Where the secured party (in this situation the lender), without reasonable excuse, fails to register the financing change statement, or certificate of discharge or partial discharge, or all of them, as the case may be, required pursuant to the Personal Property Security Act (Ontario) within 10 days after receiving a demand for it, the secured party shall pay $500 to the person making the demand (in this case the borrower) and any damages resulting from the failure. The sum and damages are recoverable in any court of competent jurisdiction.

If no discharge is registered the PPSA registration will remain on the system until the end of the registration period.

Why Should You Do a Search Before Buying a Used Product

Before buying a used car or other used goods, consumers should do a PPSA search to protect themselves financially. For example, a search may indicate that the seller or a previous owner has obtained a loan and that the seller may not have full rights in the used car that the consumer wants to buy. A PPSA search might ascertain that there is an outstanding amount still owed against the used car. It may be that this loan is paid off already but the discharge has not been done. If so, the search results will enable the consumer to contact the seller to confirm whether or not the loan taken out by the seller is still in effect, and to obtain further details. If the loan has been repaid but there is still a PPSA registration on file respecting the loan, the buyer should insist that the seller to promptly register a discharge before the sale is completed. However, if there is an outstanding loan, the consumer may either decide against completing the sale or require the seller to arrange for payment of the loan as well as registration of the discharge. It would be a terrible situation for you if you were to buy a used car and later find out that a bank loan was outstanding regarding that vehicle and that you do not actually own it at all.

If the seller has rights in the used car and a search is not done, the car could later be seized if the buyer fails to repay the loan. A PPSA search is not required when buying a new item such as a car.

What Information is Required to Do a Search Against a Business Name

The legal name of the business must first be determined. If the business is a corporation, the incorporated name should be searched, i.e. 279482 Ontario Inc. In the case of a partnership a search should be done against the partnership name. If a company or business carries on business under a trade name, such as 279482 Ontario Inc. operating as Joe’s Used Car Sales, the search must also be done under the business name. It is important that you know the exact and proper name of a company or business before you do a search otherwise your search may not provide you with the proper information. If you have any concerns about whether you have an accurate name of a company Resources for Canadian Business Owners may be able to help you with this as a free service. Contact us and we will see what we can find out for you prior to you performing a PPSA search.

What Information is Needed to Search Against an Individual’s Name

There are two types of individual PPSA name searches when searching an individual’s name. You may request that either an individual specific or an individual non-specific be done.

You must supply the first given name, initial of second given name (if any), surname and date of birth of an individual to do an Individual Specific Search. This information should be verified against an official document such as a birth certificate, change of name certificate or certificate of Canadian citizenship. The search is called “Specific” because you have specific information about this person beyond his or her first and last names. You might have a birth date and/or a middle name.

A Non-Specific Search requires only the first given name and surname. This search should be done when a consumer does not know the individual’s date of birth or the initial of the second given name or wants to lessen the risk of missing a registration due to error. Sometimes a registration might be done against an individual by their first and last name and at other times by their first, second and last name. Therefore sometimes doing a non-specific search will give you wider results and thereby not miss the registration you are looking for. Keep in mind though if the name is common you could wait a few weeks to get the results since if the number of pages of the search is extensive the search results have to be mailed rather than pdfed to you by email.

The results for both types of searches will disclose only registrations that set out the exact name (and birth date for a specific search) which is searched.

The search results are provided in pdf form unless the search criteria is so vague the results are too expansive. For instance if you search John Smith it is possible to get 50 pages back from the government and this would have to be mailed. There would also be a time delay with this type of search.

How to Change Information on a Registered PPSA Financing Statement

It is possible to register a financing change statement in order to amend or update a registered PPSA financing statement.

13 Jul 2015

Directors Resolution to Approve an Agreement

by Holly Crosgrey | posted in: Directors, General Corporate Law, Maintaining Your Company, Ontario Business Corporations Act | 0

The directors of a corporation are elected by the shareholders to manage the affairs of the corporation. The duties of the directors are outlined in the statute of incorporation, in the by-laws and as the shareholders may direct from time to time. The directors appoint officers to assist them with the day to day matters. For small operations there may be one shareholder, one director and one officer and this may be the same person. For larger operations, there may be numerous directors and officers.

One of the duties of the directors of a corporation is to approve agreements, contracts, leases and other documents that the corporation is or has entered into with other parties. The officers will present these documents to the directors for their approval before entering into the particular agreement or contract.

There are two ways in which a directors resolution to approve an agreement can be documented: (1) directors approval BEFORE the agreement has been signed, and (2) directors approval AFTER the agreement has been signed. Technically all agreements, leases, promissory notes, contracts, etc. should be shown to the directors before they are executed by the corporation’s officers, however, in some cases this does not happen, and the agreement has to be approved after the fact.

Legalities Around Preparing a Directors Resolution to Approve an Agreement

The statute of incorporation provides clear instructions as to how directors approve matters. Most statutes will provide for the manner in which a meeting can be held in order that a directors resolution to approve an agreement can be passed. Many statutes also provide for directors to approve matters without holding a meeting. In this case, ALL of the directors must sign a resolution. An example of a clause in a statute providing for directors to sign without holding a meeting is shown below:

“Resolutions in writing

129 A resolution in writing, signed by all the directors entitled to vote on that resolution at a meeting of directors or a committee of directors, is as valid as if it had been passed at a meeting of directors or a committee of directors.”

The Characteristics of a Directors Resolution to Approve an Agreement

A Directors Resolution to approve an agreement has a standard layout that provides for the following:

Recitals (these explain what the agreement or matter is about and what the directors hope to achieve by the approval)
Approval of the Terms and Conditions of the Agreement
Approval of the form of Agreement
Approval of the authorized signing authorities who can sign the agreement on behalf of the corporation
Approval of the delivery of the agreement by the authorized signing authorities
A catchall phrase

Frequently, as well, parties outlined in a directors resolution will have their names defined. An example of this would be 222553 Ontario Inc. (hereinafter referred to as “222553”). If the name of the company has been defined in this manner, then every time the name of 222553 Ontario Inc. shows up in the resolution after it is defined it will be shown as 222553. You will find examples of resolutions on this page that show how this is done.

How to prepare a Directors Resolution to Approve an Agreement BEFORE it is signed

The following will outline the different paragraphs that should be in the directors resolution in order for it to cover all requirements for proper approval..

Recitals

The first step is to describe the agreement being signed in the recitals. Below are some examples:

EXAMPLE 1: “WHEREAS the Corporation wishes to enter into an agreement of purchase and sale (the “Agreement”) among the Corporation, 4211323 Ontario Inc. (“4211323”) and John Doe dated the 10^th day of July, 2015, pursuant to which the Corporation shall purchase from 4211323 all of the assets of a business known as The Green Tree;”

EXAMPLE 2: “WHEREAS the Corporation wishes to enter into an employment agreement (the “Agreement”) between the Corporation and John Doe dated the 10^th day of July, 2015 which sets out the terms of employment of John Doe;”

EXAMPLE 3: “WHEREAS the Corporation wishes to enter into a lease agreement (the “Lease”) between the Corporation and John Doe Realty Inc. (“John Doe”) dated the 10^th day of July, 2015 pursuant to which John Doe will rent to the Corporation the premises located at 1145 Midland Avenue, Scarborough, Ontario under the terms and conditions more particularly described in the Lease;”

Approval of Agreement

Below are some examples of the language used in resolutions to approve an agreement:

EXAMPLE 1:

“NOW THEREFORE BE IT RESOLVED THAT:

The entering into of the Agreement by the Corporation, pursuant to the terms and conditions thereof, is hereby approved.
The form of Agreement, as presented to the directors of the Corporation, is hereby approved.”

EXAMPLE 2:

“NOW THEREFORE BE IT RESOLVED THAT:

The entering into by the Corporation of the Lease, pursuant to the terms and conditions therein, is hereby approved.
The form of Lease, annexed hereto as Schedule “A”, is hereby approved.”

Authorized Signing Authority for a Directors Resolution to Approve an Agreement

The next step in the directors resolution is to determine who the signing officers will be that have authority to execute the agreement on behalf of the corporation and to determine who can deliver the agreement. The by-laws of a corporation determine who can sign agreements on behalf of a corporation. A standard clause in a by-law will be as follows:

“Execution of Instruments – Deeds, transfers, assignments, contracts, obligations, certificates and other instruments may be signed on behalf of the Corporation by any officer or director of the Corporation. In addition, the board may from time to time direct the manner in which and the person or persons by whom any particular instrument or class of instruments may or shall be signed. Any signing officer may affix the corporate seal to any instrument requiring the same.”

This is a standard clause that can be found in a by-law. This clause provides that any one officer or director can sign agreements on behalf of the Corporation. This clause also provides that the Board may from time to time determine any other person to have authority to execute agreements. The second clause is very important because it allows for a broader form of approval. The paragraph above provides that the directors may approve something other than any officer or director approving an agreement. For instance, they could have an employee sign the agreement on behalf of the Corporation if they wished. This approval would be acceptable as long as the directors approved this change from the provisions located in the by-law.

If there is no clause in the by-law that provides for the directors to determine from time to time who can sign, then the directors must abide by the execution of instruments clause that is there. See below for an example.

“Execution of Instruments – Deeds, transfers, assignments, contracts, obligations, certificates and other instruments may be signed on behalf of the Corporation by any two officers or directors of the Corporation.”

In the above case, if the by-law provides for the following, then two officers and directors must sign any agreement, contract, etc. on behalf of the Corporation and this clause cannot be varied unless the directors and shareholders approve an amendment to the by-law.

Below are examples of approval resolutions which determine who can sign and deliver an agreement on behalf of a company.

EXAMPLE 1: “Any officer or director of the Corporation is hereby authorized to execute and deliver the Agreement on behalf of the Corporation.”

EXAMPLE 2: “John Doe is hereby authorized to execute and deliver the Agreement on behalf of the Corporation.”

Catchall Phrase in a Directors Resolution to Approve an Agreement

The final clause in a directors resolution to approve an agreement is the catchall phrase. This gives the authorized signing authority the right to execute all other ancillary documents that may be required to implement the transaction contemplated by the Agreement. Below is a catchall phrase:

“Any officer or director of the Corporation be and is hereby authorized and directed to do all acts and things and to execute or cause to be executed all such instruments, agreements and documents as in his opinion may be necessary or desirable to complete the transactions contemplated herein.”

Below is an example of a resolution providing for approval of an agreement that has not yet been signed. Note that the paragraph at the bottom below the resolution refers to a statute. This statute reference should be changed to show the statute refer for the particular company you are preparing the resolution for.

How to prepare a Directors Resolution to Approve an Agreement AFTER it is signed

Below is an example of a resolution providing for approval of an agreement that has already been signed. Resolutions that are approved after they are signed are “approved, ratified and confirmed“.

23 Oct 2013

Establish a Foreign Business in Canada (Ontario)

by Holly Crosgrey | posted in: Extra-Provincial Registration, Foreign Business in Canada, Ontario, Ontario Extra-Provincial Corporations Act | 0

A Foreign business, incorporated in any country outside of Canada, may register to carry on business in Ontario provided it follows the requirements of the Extra-Provincial Corporations Act (Ontario).

Toronto, is the capital city of Ontario, Canada and it is the largest city in Canada. It is, therefore, a popular place for foreign companies to set up business.

Registration Requirements for Foreign Companies pursuant to the Ontario Extra-Provincial Registration Act

Below are the things to consider before registering a foreign business in Canada along with the requirements under the Ontario Extra-Provincial Registration Act which must be considered before a foreign company starts the process to register to conduct business in Canada.

What Constitutes a Foreign Business Operating in Ontario

The Extra-Provincial Corporations Act (Ontario) governs a foreign business carrying on and operating in Ontario.

The Act defines carrying on business in Ontario if a company:

has a resident agent, representative, warehouse, office or place where it carries on its business in Ontario
holds an interest, otherwise than by way of security, in real property situate in Ontario, or
otherwise carries on its business in Ontario.

What Does Not Constitute Carrying on Business in Ontario

The Extra-Provincial Corporations Act indicates that it does not constitute carrying on business in Ontario if a company

takes orders for or buys or sells goods, wares and merchandise, or
offers or sells services of any type, by use of travellers or through advertising or correspondence.

What Documents are Required in Order to Register in Ontario

Ontario NUANS– A foreign business must have its name pre-cleared for use in Ontario by providing the Ontario government with an Ontario NUANS. An Ontario NUANS report provides the government with confirmation that your name is available. A registered NUANS search house specialist must pre-clear your name before it obtains your NUANS report.

If the name is not available for use the company may conduct business in Ontario under a business name.

Appointment of Agent for Service – The foreign company must have a representative, who lives in Ontario, who will act as agent for service and receive correspondence on behalf of the company. This is sometimes not possible for a foreign company, however, there are individuals and/or companies that will act as agent for service for an annual fee.

Certificate of Status – The foreign company is going to have to provide a Certificate of Status from its home jurisdiction. This certificate will need to indicate:

The name of the corporation
Date of incorporation/amalgamation
Jurisidiction in which the company was incorporated
Confirm the company is valid and subsisting

These certificates are requested from the government pursuant to which the company was incorporated. Not all jurisdictions in every country will provide a certificate of status that show all of this information. In a case where it is not possible to obtain a complete certificate of status, a legal opinion from a solicitor in the company’s home jurisdiction will be accepted.

Licence Issued to a Foreign Company Upon Registration

Once registered the foreign company is provided with an Ontario Extra-Provincial Licence.

Timing of Foreign Registration in Ontario

Once the application has been submitted it will take up to 10 days for the license to be processed.

What Legal Requirements Must be Considered Subsequent to Registration

Federal Tax Return filing requirement – The Canada Revenue Agency governs the collection of taxes in Canada. All companies registered in Canada, including foreign companies registered in Canada, must pay taxes. For to the more information about the requirements refer to: international and non-resident taxes.

Ontario Annual Return filing requirement – The Ontario Corporations Information Act provides all foreign companies registered in Ontario must file an annual return filing each year with the Ministry of Government Services.

Initial Return and Notice of Change filing – The Ontario Corporations Information Act also provides that subsequent to registration (within 60 days) the foreign corporation must file an Initial Return with the Ministry of Government Services. The service that registers your company should also file the Initial Return. Be sure to confirm this upon registration.

The Initial Return outlines the address information, chief officer located in Ontario and the agent for service and its address. If the information changes a Notice of Change is expected to be filed within 15 days.

Federal Business Number – Foreign companies which are registered in Ontario will be required to obtain a Federal Business Number. Further, there are certain accounts that may need to be opened under that Federal Business Number, i.e. (a) HST account, (b) Payroll account, or (c) Import/Export Account.

HST Account – If the foreign company’s worldwide profits are $30,000 or more the company will be required to collect a 13% tax called Harmonized Sales Tax on all sales in Canada;
Payroll Account – If the foreign company has employees in Canada it will be required to open a payroll account; and[margin_5t][margin_5t]
Import/Export Account – If the foreign company intends to import/or export goods it will require an Import/Export Account.

For more information about the accounts refer to Federal Business Number.

Other Considerations

Since some companies wish to conduct business in Canada but will not in the beginning have someone living in Canada, it is sometimes beneficial to have a remote phone service and mail pickup. These services are available for those seeking them.

If you require further information about foreign registration in Canada feel free to contact Resources for Canadian Business Owners.

23 Oct 2013

Ontario Certificate of Status

by Holly Crosgrey | posted in: Certificates of Status and Good Standing, Ontario, Ontario Business Corporations Act | 0

What determines whether an Ontario company or a foreign company licensed in Ontario is in good standing and can obtain a favourable Ontario Certificate of Status?

In order for a company to obtain a favourable Certificate of Status the factors taken into consideration by the government are:

– the status of the company’s Ontario Annual Return filings required pursuant to the Corporations Information Act (Ontario), and

– the status of the company’s T2 Corporation Information Tax Return filings required pursuant to the provisions of the Income Tax Act (Canada).

Relationship of Ontario Annual Return Filing Requirement and an Ontario Certificate of Status

Ontario corporations incorporated pursuant to the Business Corporations Act (Ontario) and foreign business corporations licensed to carry on business in Ontario pursuant to the Extra-Provincial Corporations Act (Ontario) are required to file their Ontario Annual Return with Canada Revenue Agency within six months after the end of each tax year.

Ontario Share Corporations are required to file a Schedule 546 together with their T2 Corporation Information Tax Return.

Foreign business corporations are required to file Schedule 548 together with the C2 Corporation Information Tax Return.

The Ontario government is very lenient about these filings in comparison to most other provinces and territories. It will allow a company to be behind in its Ontario Annual Return filings and T2 Corporation Information Tax Return filings for three or more years before it will dissolve a company. It will also provide the company with adequate warning if its charter is going to be cancelled.

A Certificate of Status will be able to be obtained for an Ontario corporation as long as the company has not been dissolved for the above-referenced filings or it has not violated any of its registration statute requirements.

However, if the company does not make its filings eventually it will be dissolved. Once the company is dissolved it is no longer in good standing and a favourable Ontario Certificate of Status will not be issued if requested.

If a company is required to provide a bank, solicitor or supplier with a clear Certificate of Status and its company has been dissolved, the company will need to be revived which can be very costly.

You can obtain an Ontario Certificate of Status for a company by requesting same from a Canadian search and registration service.

Ontario

Aspects Required When Choosing a Name for Your Business

Distinctive Element

Vancouver

Dominique's

Butterwind

Descriptive Element

Lawn Mowing Services

Graphics Design

Wind Surfing Instruction

Legal Element

Ltd.

Corp.

Inc.

Preliminary Name Searches

Choosing a Name for a Quebec Company

What is a Sole Proprietorship

Is Registration of a Sole Proprietorship Necessary?

What Jurisdictions in Canada Govern the Registration of Sole Proprietorships

Why does the Business Name have to be Approved in Most Provinces or Territories

What are the Advantages of a Sole Proprietorship

What are the Disadvantages of a Sole Proprietorship

Taxation of Sole Proprietorships

How Long Is the Registration of My Sole Proprietorship in Place

What Happens If I Do Not Renew My Registration on the Expiry Date

Do I need a GST/HST Number for My Sole Proprietorship

What If the Information Provided on the Sole Proprietorship Form Changes

What If I Wish to Change the Name of My Sole Proprietorship?

What if I Wish to Cancel my Sole Proprietorship?

What If I Do Not Register My Sole Proprietorship

What If I Wish to Conduct Business as a Sole Proprietorship in More Than One Province

Renewing a Sole Proprietorship

Financial Year End of a Sole Proprietorship

Why Is it Important that the Address of my Sole Proprietorship is Correct?

Which Provinces Accept a NUANS report versus a Specific Province Name Clearance Report?

What is a Name Search Report

What Information is Provided by a Name Search Report or a NUANS Report

What is A NUANS Search System

What is a Name Search Report and NUANS Report Used For

Do All Provinces and Territories Accept the NUANS Name Search

How Does the NUANS Name Search System Capture the Names from the Other Name Search Systems in Canada

Why is a Name Search or NUANS Report Necessary

How Do You Ensure Your Proposed Business Name is Distinct

Are There Different Types of NUANS Name Search Reports

Why Are Federal Name searches different from Alberta Name Searches, Ontario NUANS, PEI and NB Name Searches

Why Does It Matter if I use a Name Similar to a Name in Another Province

Is a NUANS Report Required for a Business Name or Sole Proprietorship Registration

What is a Preliminary NUAN Name Search

How do I Arrange to have a Preliminary Name Search

How Long Does it Take to Get a Name Search or NUANS Report

How Long is a Name Search or NUANS Report in effect.

Name Searches for Non-Profit Corporations and Charities

How many directors can an Ontario Company Have

Who can Qualify to Act as a Director of an Ontario Company

Director’s Consent to Act as a Director

Resident Canadian Requirement for Directors of Ontario Companies

Appointing Officers

Resignation of Officers

Remove an Officer

Annual Resolutions

Notice of Change

Business Corporations Act (Ontario)

Canada Business Corporations Act

Business Corporations Act (Alberta)

Business Corporations Act (British Columbia)

The Business Corporations Act (Saskatchwan)

The Corporations Act (Manitoba)

By-law Provisions Regarding Officers

Definition of Resident Canadian

Meaning of the Definition of Resident Canadian

What is a Resolution

Resolutions are Approved by Directors or Shareholders

How Are Directors Resolutions and Shareholders Resolutions Approved

What Types of Resolutions are There

What Does a Resolution Look Like

How do You Know Whether the Directors or Shareholders Must Approve a Particular Matter

Need a By-law? Purchase a Microsoft Word Version of By-law No. 1.

Purchase a Word Version Version of Annual Resolutions

Purchase Word Versions of Dividend Approval Resolutions

Approval of Financial Statements by Directors