Incorporation in five easy steps

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Now that you’re convinced about the many advantages to incorporating your business, all that remains is for you to take action.

Step 1: Incorporating federally or provinciallyYou have to decide whether you want to incorporate your company federally or provincially. There are some differences between the two laws, but they both have similar provisions pertaining to:

  • Model of corporate organization;
  • Effects of any shareholder agreement on the sale, redemption and transfer of shares;
  • The powers of the court to intervene in disputes with shareholders or directors;

Below are some of the characteristics of each jurisdiction:

Canada Business Corporations Act [1]

(hereinafter “CBCA”)

Business Corporations Act (Québec) [2]

(hereinafter “BCAQ”)

  • Easier recognition internationally (Bilingual charter)
  • Lower initial cost to incorporate than federally
  • Only one (1) register where the corporation must file its annual return (Registraire des entreprises du Québec)
  • Head office anywhere in Canada
  • Head office must be in Québec
  • Mandatory board of directors
  • Can decide not to appoint a board of directors [3]
  • Option to grant par value to shares
  • At least 25% of directors must be Canadian
  • No requirement as to directors’ place of residence
True or False?

Q: “We are provincially incorporated, but we’re going to open a second outlet in Ontario. I should have incorporated federally …”

A: FALSE! Your company can operate in other provinces and outside Canada even if it is provincially incorporated. The only limitation is that the corporate head office must remain in Quebec and you will have to pay registration fees in the provinces where you intend to carry on business (which is also the case for a federally-incorporated company).

Step 2: Name your company

You can pick the name of your company or be assigned a numbered name (1234-5678 Québec Inc. or 1234567 Canada Inc.), whether under the Quebec Business Corporations Act (the “BCAQ”) or the Canada Business Corporations Act (the “CBCA”).

It is usually a little faster to incorporate a numbered company than if you choose a name. This is because the Registraire des entreprises du Québec (the “Registraire”) or Corporations Canada does not have to verify that the name is compliant. The name is verified when you incorporate. The Registraire or Corporations Canada must ensure, among others, that the name:

  • Is not identical to the name of a company that already exists; and
  • Complies with the different applicable laws. [4]

Finally, pursuant to the BCAQ, the company must be incorporated under a French name, although it may have an English version as well.

Note that the company’s registered name is not automatically synonymous with a trademark. A trademark meets specific requirements subject to a separate legal framework.

Attention: When you incorporate, the Registraire or Corporations Canada will not verify whether your company’s name may be confused with an existing trademark. Given the resulting effects, a forced name change during operations should be avoided. A name change may incur expenses and have adverse consequences on your business (lost goodwill, change of web site address, change to all your documents and promotional objects, etc.).

Other names! You can also carry on business under names other than your corporate name, but you must register and declare them with the Registraire.

 True or False?

Q: “We want to conduct business under an English name, so we have to incorporate federally.”

A: True and false. If you only plan to carry on operations in provinces outside Quebec, it is true that you can have an English name if you incorporate federally. ATTENTION! Your business will have to register under a French name as soon as you start conducting business in Quebec. Moreover, you must comply with the regulations on displaying your trademark on public signage if you have establishments in Quebec. [5]

Step 3: Articles of Incorporation

The articles are the documents you will use to determine your company name, the minimum and maximum number of directors, any restrictions on share transfers and the different share classes in your corporation.

It is generally useful to create different share classes. You might plan to issue dividends only to specific individuals or seek financing from investors that you don’t want to have voting rights. It is therefore essential that you and your partners discuss the different rights and advantages you want to grant shareholders. Your legal advisor will guide you in choosing the capital stock that corresponds to your desired corporate image.

Step 4: Organization

A minute book will be used to organize your corporation. In it, you will find all the important corporate documents, including the certificate and articles of incorporation, information on the directors and officers, the company by-laws, directors’ and shareholders’ resolutions, shareholder agreements and share certificates, if any.

Step 5: Share issue

Under the provincial law, shares issued by your corporation may be with or without a certificate. Under the CBCA, you will automatically receive a share certificate describing the number of shares you purchased and their class.


  1. [1] Canada Business Corporations Act, RSC 1985, c C-44.
  2. [2] Business Corporations Act, CQLR c S-31.1.
  3. [3] Shareholders can decide to appropriate all the powers normally conferred on the board of directors for themselves pursuant to a unanimous shareholders’ agreement.
  4. [4] Certain laws prohibit the use of specific words that are contrary to public order.
  5. [5] To this effect, see the following article: http://www.lavery.ca/en/publications/our-publications/2980-public-display-of-trade-marks-in-a-language-other-than-french-coming-into-force-of-the-regulatory-amendments.html