Manage Your Practice > Practice Area Resources > How to Incorporate a For-Profit Business

How to Incorporate a For-Profit Business

Updated June 2012

This How-To Brief outlines steps to take to set up a for-profit corporation both under Ontario and federal legislation.

1Discuss the general incorporation issues with the client

  • Canvass options with the client as to the most appropriate corporate vehicle, including a discussion of alternative business arrangements that might be applicable in the circumstances, such as sole proprietorship, partnership or joint venture.
  • Issues to be covered would normally include concepts such as limited liability, perpetual existence, taxation, financing, costs of incorporation and maintenance, prestige, transferability of ownership and residency requirements for director(s).
  • See the Government of Canada's "Forms of Business Organization" page on the Canada Businesswebsite in the Resources section of this How-To Brief for a helpful government summary of business forms including advantages and disadvantages of each form of business organization.
  • If provincial (Ontario) incorporation is sought, see the Government of Ontario's "Incorporating" page in the Resources section of this How-To Brief for general filing instructions for both paper-based and electronic incorporations.
  • If federal incorporation is sought, see Industry Canada’s "Guide to Federal Incorporation" page on the Industry Canada website in the Resources section of this How-To Brief for a comprehensive guide to federal incorporation.

2Establish that the desired name is permitted

  • Obtain a NUANS search result; ensure that the name otherwise complies with applicable legislation and regulations (Canada Business Corporations Act for federal incorporations and the Ontario Business Corporations Act for provincial incorporations).
  • "Limited," "Limitée," "Incorporated," Incorporée," "Corporation" or,  if incorporated federally, "Société par actions de régime fédéral" or the corresponding abbreviation "Ltd.," "Ltée," "Inc.," "Corp." or, if incorporated federally, "S.A.R.F." must be part, other than only in a figurative or descriptive sense, of the name of every corporation, but a corporation may use, and be legally designated by, either the full or the abbreviated form.
  • When choosing a corporate name, certain words or expressions cannot be used:
    • words or expressions, in any language, that are obscene or objectionable in nature
    • words that imply the business is a different type of organization—you may not use numbers or words that imply the business name is a corporate number name
    • the words "college," "institute" or "university" without the written consent of the Ministry of Education if using the word implies the business is a post-secondary institution
    • words with restricted use under federal or Ontario laws
    • words that imply the business is associated with the Crown or the Government of Canada, any province of Canada or any municipal government without the written consent of the appropriate authority
    • names of individuals unless the individuals have or had a material interest in the business activity and have given their written permission—if an individual is not living and the name is used within 30 years of the date of death, the written consent of the estate must be obtained
  • The following are other restrictions on choosing a name:
    • Business names must be registered in the Roman alphabet (English, French, Spanish, Italian, Latin, etc.) and may contain numerals.
    • The following marks may also be included in the name, but may not be used as the first character: ! " # $ % & ' ( ) * + , - . / : ; > = < ? [ ] \ ^ ` .
    • Business names composed of characters from other alphabets must be translated and registered in a language using the Roman alphabet.
    • A business name in a language other than one using the Roman alphabet may be used in advertising and signs, but the business name must also be displayed in a language using the Roman alphabet.
    • If the corporation intends to carry on business using a name other than its actual corporate name, the business name must be registered under the Business Names Act.
  • See the Resources section of this How-To Brief for links to the following websites:
    • Ministry of Government Services, Guide for Registering Your Business Name in Ontario
    • Corporations Canada, Choosing a Name, for information on registering a business name for a federally incorporated corporation
    • Ontario NUANS Search Houses listed by Industry Canada (for both Ontario and federal incorporations)—search houses have expertise in and provide advice on how to meet the requirements of name regulations and policies when ordering NUANS name search reports

3Prepare the articles of incorporation

  • Careful consideration should be paid to the articles of incorporation. A corporation is limited in its ability to exercise power and carry on business by it articles of incorporation.
  • Some things to consider include the following:
    • the minimum and maximum number of directors
    • restrictions on the nature of the corporation's business
    • authorization of the issuance of multiple classes of shares
    • rights, privileges, conditions and restrictions of any classes of shares
    • share transfer restrictions (to obtain the benefit of private placement prospectus exemptions under the Securities Act)
    • borrowing and mortgaging powers
    • pre-emptive rights of shareholders
    • requirement of greater majority to perform any act by directors or shareholders
    • cumulative voting for election of directors
    • lien on shares of shareholders indebted to the corporation
  • Also see links to the following forms in the Resources section of this How-To Brief:
    • Ontario Ministry of Government Services, Form 1, Articles of Incorporation, Business Corporations Act
    • Industry Canada, Canada Business Corporations Act, Form 1, Articles of Incorporation (Section 6)

4File the articles of incorporation

  • Filing articles of incorporation electronically may be faster and more convenient than filing by mail. Acknowledgement of filing is immediate and electronic incorporation documents are provided, which may eliminate the need to scan paper documents and may facilitate the electronic storage of corporate documents.
  • If the corporation will have a word name rather than a number name, a NUANS name search report must be submitted with the articles of incorporation. The NUANS name search report is a seven-page, computer-printed search report consisting of existing corporate names, business names and trademarks that are similar to the proposed corporate name. The NUANS name search is valid for 90 days from the date on which it was obtained. The NUANS name search report is not necessary if incorporating a corporation with a number name.
  • All documents filed in paper form must be legible and eligible for microfilming. Information must be typed or hand printed in block capital letters on one side of 8½" x 11" white bond paper.

Federal incorporation online

  • To incorporate a federal corporation online, the following documents must be filed, in the prescribed form, with Corporations Canada using its Online Filing Centre:
    • Form 1, Articles of Incorporation: Original signatures of the incorporator(s) are not required, however, signed copies of the original documents must be retained in the records of the corporation.
    • Form 2, Initial Registered Office Address and First Board of Directors: Original signatures of the incorporator(s) are not required; however, signed copies of the original documents must be retained in the records of the corporation.
      • Note that at least 25% of the directors of a corporation must be Canadian residents.
    • Federal-biased NUANS name search report: This is required if the corporation will have a word name rather than a number name.
    • Filing fee of $200.00: The filing fee may be paid by MasterCard, Visa or American Express.
    • Corporate name pre-approval (optional): This option from the Online Filing Centre allows you to provide the NUANS name search report together with other relevant information, which will be used by Corporations Canada to pre-approve the proposed name.
    • Corporate name information form (optional): This option from the Online Filing Centre allows you to provide Corporations Canada with additional information about the name of the corporation, which will be used by Corporations Canada to determine whether the proposed corporate name will be approved. Submitting this form may decrease the time required for Corporations Canada to approve the proposed corporate name.
  • Corporations Canada will send by email the certificate of incorporation. Corporations Canada will also assign the corporation a corporation number, which will appear on the certificate of incorporation.

Federal incorporation by mail, by fax or in person

  • To incorporate a federal corporation by mail, by fax or in person, the following documents must be filed, in the prescribed form, with Corporations Canada:
    • Form 1, Articles of Incorporation: If filing by mail or in person, two copies of the articles of incorporation, each bearing original signatures of the incorporator(s), are required. If filing by fax, original signatures of the incorporator(s) are not required; however, signed copies of the original documents must be retained in the records of the corporation.
    • Form 2, Initial Registered Office Address and First Board of Directors: If filing by mail or in person, two copies of this form, each bearing original signatures of the incorporator(s), are required. If filing by fax, original signatures of the incorporator(s) are not required; however, signed copies of the original documents must be retained in the records of the corporation.
      • Note that at least 25% of the directors of a corporation must be Canadian residents.
    • Federal-biased NUANS name search report: This is required if the corporation will have a word name rather than a number name.
    • Filing fee of $250.00: The filing fee may be paid by MasterCard, Visa or American Express.
    • Corporate name pre-approval (optional): This form may be sent to Corporations Canada by fax or mail along with the NUANS name search report and any other relevant information and will be used by Corporations Canada to pre-approve the proposed name.
    • Corporate name information form (optional): This form may be sent to Corporations Canada by fax or mail and provides Corporations Canada with additional information about the name of the corporation, which will be used by Corporations Canada to determine whether the proposed corporate name will be approved. Submitting this form may decrease the time required for Corporations Canada to approve a proposed corporate name.
  • Corporations Canada will keep the documents on file and return, in the same manner that you filed the documents, one paper copy of each document together with the certificate of incorporation. Corporations Canada will also assign the corporation a corporation number, which will appear on the certificate of incorporation.

Ontario incorporation online

  • To incorporate an Ontario corporation online, the following documents must be filed, in the prescribed form, with the Ontario Ministry of Government Services through one of the service providers under contract with the Ministry:
    • Form 1, Articles of Incorporation: Original signatures of the incorporator(s) are not required when filing articles of incorporation online. An original, signed copy, however, must be retained in your file.
    • Ontario-biased NUANS name search report: This is required if the corporation will have a word name rather than a number name.
    • Filing fee of $300.00: The filing fee may be paid electronically by any means permitted by the particular service provider selected and must be paid in addition to any fee charged by the particular service provider.
  • The service provider will make available an electronic copy of the articles of incorporation and certificate of information. The Ministry will also assign the corporation a corporation number, which will appear on the certificate of incorporation.

Provincial incorporation by mail or in person

  • To incorporate an Ontario corporation by mail or in person, the following documents must be filed, in the prescribed form, with the Ontario Ministry of Government Services:
    • Form 1, Articles of Incorporation: Submit two copies each bearing original signatures of the incorporator(s).
    • Ontario-biased NUANS name search report: This is required if the corporation will have a word name rather than a number name.
    • Filing fee of $360.00: If filing by mail, the filing fee may be paid by cheque or money order payable to the Minister of Finance. If filing in person, the filing fee may be by cheque or money order payable to the Minister of Finance or, at most branches, by Visa, MasterCard, American Express or debit card.
    • Covering letter: This should give a contact name, return address and telephone number. If a future date of incorporation (up to 30 days ahead) is required, the date requested must be set out in the covering letter.
    • Legal opinion (optional): If the corporation meets the requirements of s. 6(2) of Reg. 62, R.R.O. 1990, made under the Business Corporations Act, then a legal opinion must accompany the articles of incorporation.
  • The Ministry of Government Services will keep the documents on file and return one paper copy of the articles of incorporation together with the certificate of incorporation. The Ministry will also assign the corporation a corporation number, which will appear on the certificate of incorporation.
  • Note that Form 2, Consent to Act as a First Director, is not required to be filed, but must be kept at the corporation’s registered office.

5Proceed with the balance of the organization steps

  • Prepare By-Law No. 1 dealing with general operating matters e.g., meetings, notice, quorum, officers, proxies, execution of documents and other matters of a continuing nature (see the link to a sample By-Law No. 1 in the Resources section of this How-To Brief) and any other by-law that is required (e.g., By-Law No. 2 dealing with borrowing and the pledging of the assets of the corporation as security).
  • Prepare initial written resolutions of the directors (or prepare minutes if a meeting is held) to pass the by-laws, allot and issue shares, appoint officers, approve a sample share certificate, approve the corporate seal (if any), determine the fiscal year end and pass any other director's resolutions that may be necessary or appropriate.
  • Prepare initial written resolutions of the shareholders (or prepare minutes if a meeting is held) to ratify by-laws, elect permanent directors, appoint auditors or accountants (as the case may be) and pass any other shareholder's resolutions that may be necessary or appropriate.
  • In Ontario, file with the Ontario Ministry of Government Services a Form 1, Initial Return, pursuant to the Corporations Information Act.
  • If a federal corporation is formed, it is necessary to register the corporation in those provinces in which the corporation intends to carry on business.
  • Provide advice to the client as to whether a shareholders' agreement or unanimous shareholders agreement is appropriate and, if so, the options available in that regard. (See links to the sample unanimous shareholder agreement and sample shareholder agreement in the Resources section of this How-To Brief.)

Resources

Statutes