|Pre-Incorporation Checklist - Ontario Corporation
Select the name of the Corporation. You must select the name of the corporation. Alternatively, you may opt for a numbered corporation.
- An Ontario corporation's name must end with one of the following: Limited, Limitée, Incorporated, Incorporée, Corporation, Ltd., Ltée, Inc. or Corp.
- An Ontario corporation's name must be in English, French or it may have a version in both languages.
- Choosing a corporate name can be a difficult task. To increase the chances of your proposed name being accepted, try to select a name that is as distinct as possible, yet accurately describes your business. If your proposed corporate name uses common or popular names, the chances of it being accepted decrease. Furthermore, you may not be allowed to use a name which is either identical or deceptively similar to one that is already used by another corporation or competitor in your jurisdiction.
- Alternatively, an Ontario corporation may be assigned a number as its legal name (for example, 123456 Ontario Inc.). This speeds up the incorporating process and permits immediate delivery of the Articles of Incorporation. The corporation may then register a trade name and be known to its customers as doing business under the trade name. Although the corporation must be identified by its actual name (i.e., the number followed by Ontario Inc. or Ltd.) for all formal and legal matters and relations (e.g., contracts), the corporation may use its trade name for exterior signs, business cards, letterhead, etc.
Select a Registered Office. You must select a registered office for the corporation that is within Ontario.
- The registered office of a corporation is the location officially designated as such by the corporation to the relevant government department or authority. The registered office may be a commercial or residential address, but should not be a post office box. You will need the complete address.
- The registered office is typically the principal place of business of the corporation (e.g., store, plant or office) and does not have to actually be an "office". If the corporation will have more than one place of business, you may select any of the places of business.
Select Shareholders. You must select who will be the shareholders of the corporation.
- Shareholders are the person(s) who hold (i.e., own) the shares in the corporation. Whoever holds the shares of a corporation essentially "owns" the corporation. By reason of the votes that are usually attached to the shares, the shareholders control the corporation.
- Every private corporation must have at least 1 shareholder and there may be several (but not more than 50) shareholders.
- You will need the complete residential address of each shareholder.
Number of Shares. You must select the number of shares each shareholder will have.
- A corporation may issue as few or as many shares as it deems desirable. The crucial matter is the proportion of shares that is initially issued to each shareholder, rather than the actual number. For example, if there are 2 shareholders and each is to have a 50% interest in the corporation, it is irrelevant whether each shareholder receives 10 shares or 10,000 shares each, since in either case, both receive an equal proportion of the shares.
- Nonetheless, it may be advantageous to issue a larger amount of shares. It may facilitate selling a portion of these shares at a later date since each share will have a lower value. Also, subsequent share issues from the corporation may be more attractive to investors since the value of the shares would be lower given the larger number of shares that were already issued.
- It is not uncommon for the total amount of shares issued to all initial shareholders to equal 1000 shares. However, you may decide to increase or decrease this amount.
Select Directors. You must decide who will be the directors of the corporation.
- Directors are the individuals who administer the affairs of the corporation and make all major decisions for the corporation.
- Every corporation must have at least 1 director, and there may be several. Only individuals (i.e., physical persons) may be directors of a corporation.
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.
- Directors may also be shareholders and officers (see below) of the corporation. In fact, this is typical in small corporations.
- You will need to know the following for each director: their complete residential address, whether they are Canadian residents and their profession.
Select Officers. You must decide who will be the officers of the corporation.
- Officers are the persons who hold certain senior management positions, such as President, Vice-President, Secretary and Treasurer, among others.
A corporation must appoint a President and a Secretary.
- Officers may hold more than one office or position. For example, an individual may be the President, Secretary and Treasurer of the corporation.
- Officers may also be directors and shareholders of the corporation. In fact, this is typical in small corporations. There is no Canadian residency requirement for officers.
- You will need to know the following for each officer: their complete residential address and their profession.
Fiscal Year-end. You must select the fiscal year-end of the corporation.
- A fiscal year is any 12-month period used by a corporation as its official accounting period. A fiscal year-end is the official last day of the fiscal year of a corporation. The fiscal year-end does not need to be December 31, but is typically the last day of the chosen month.
- It is not uncommon for corporations to select December 31 as their fiscal year-end. However, you may change this date if you have specific reasons for doing so.
Select Accountants. You may select the auditors or accountants of the corporation. If you do not, you may still incorporate.
- Auditors are the professionals who check the accuracy, fairness and general acceptability of a corporation's accounting records and attests to them. A corporation must generally appoint an auditor to prepare the annual financial statements of the corporation. The accountant should be a CA, CGA or other professional with the proper credentials. Alternatively, you may appoint accountants to prepare the financial statements of the corporation but who will not act as auditors of the corporation.
- Shareholders of a private corporation may choose not to appoint an auditor for any given fiscal year. All the shareholders must agree to this decision. This decision remains valid only until the next annual meeting, where all the shareholders of the corporation must once again consent to not appointing an auditor for the following fiscal year.
Government Incorporation Fees. Ontario corporations have a government incorporation fee of $360. Named corporations also require an additional search report at a cost of $30.