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What is a corporation?
A corporation is a legal entity created by law. The terms incorporation, company and corporation generally refer to a corporation. In law, a corporation is considered a person and can own assets and have liabilities. The shareholders of a corporation are generally not responsible for the debts and liabilities of the corporation and do not own the assets of a corporation but rather own shares in the corporation.
What are annual minutes, resolutions and assemblies? Corporate laws require that an annual meeting of the shareholders be held each year and that the shareholders elect the directors of the company for the upcoming year. In addition to this, the directors will approve the financial statements of the company and present them to the shareholders at this meeting. Lastly, the shareholders will appoint an auditor or accountant and ratify the decisions of the directors of the company. The directors on the other hand will appoint officers to assist them and carry out any other matter required by law.
I have a numbered company. Can this company use a name?
A company can register a trade name and use this one with its numbered name. The numbered name will need to be used on all legal documents and contracts but the trade name can be used on exterior signs and marketing materials.
Can a company incorporated in Quebec do business in the rest of Canada?
Yes, there are no restrictions as to where a provincial company may operate and a company incorporated in Quebec or any other province can carry out business in any province of Canada.
Can I use a company incorporated in Quebec to do international business? Yes, there are no restrictions as to where a provincial company may operate or carry on business and a company incorporated in Quebec can be used to do international business such as import and export.
What are the advantages of a federally incorporated company versus a provincially incorporated company?
The main advantage of a federally incorporated company is that it may establish its head office anywhere in Canada and may change its head office to any other province in Canada. A provincially incorporated company can only have its head office in its province of incorporation.
What is an officer? An officer is a person that is appointed by the directors of the company to carry out the day to day tasks of a company. Officers are often given commonly used titles such as president, vice-president, secretary and treasurer. The functions that each officer may carry out are usually detailed in the general by-laws of a company.
What is a director? The directors of a company are elected by the shareholders of a company. Directors adopt resolutions and enact by-laws. They make the company's major decisions such as naming the persons responsible for the banking affairs of the company, they sign resolutions to authorize officers and other representatives to sign documents on behalf of the company and they adopt by-laws that set out the rules and procedures for the administration of the company. Directors appoint officers to help them carry out their functions.
How many directors are needed for a company? For a company incorporated in Quebec or federally the minimum number or directors is one and there is no maximum. Generally articles of incorporation provide for a minimum and maximum number of directors. This is done to allow some flexibility in the number of directors and avoid having to file articles of incorporation each time there is a change in the number of directors.
Do the directors of a company incorporated in Quebec have to be Canadian citizens or residents?
No, there is no requirement or limitation as to citizenship or residency to be a director of a company incorporated in Quebec.
Do the directors of a federally (Canada) incorporated company have to be Canadian citizens or residents?
In general, if there is less than four or only a sole director, then this director must be a Canadian resident. Otherwise, 25% of the directors need to be Canadian residents. There are exceptions to this rule that may be provided by specific laws and statutes so this may change depending on the sector or activity of the company.
What is a shareholders agreement?
A shareholders agreement is an agreement entered into by two or more of the shareholders of a company that may address matters relating to the sale and transfer of the shares, the administration of the company, the exercising of voting rights, the election of directors and many other aspects. A shareholders agreement is a bit like a marriage contract or a partnership agreement. A shareholders agreement is called unanimous if it is entered into by all the shareholders of a company in which case it is binding on any future purchaser of the shares providing the share certificates clearly indicate this fact.
Is the company name of a Quebec incorporation protected in all of Canada?
No, the company name will protect against the registration of an identical company name in Quebec and even then the governmental authorities make no guarantee this. To protect your company name across Canada, you need a trademark.
Is my company name protected across Canada?
The incorporation of a company does not protect your company name across Canada. To protect your company name across Canada, you need a trademark.
Am I responsible of the debts of my company?
As a general rule, the shareholders of a company are not responsible for the debts of an incorporated company. This is one of the prime advantages of incorporating. You may however be personally liable for debts resulting from fraud or abuse of law, debts which have been personally guaranteed by yourself or, if you are a director of a company, taxes and penalties owing to governmental authorities, such as unpaid sales taxes or deduction at source.
If my company goes bankrupt or closes does this terminate all personal guarantees I gave for my company?
No, the purpose of a personal guarantee is to protect the creditor if the principal debtor goes bankrupt or does not fulfill its obligations. As such, you will be responsible for all debts which you undertook to personally guarantee.