March 23, 2023

The Entrepreneur’s Roadmap to Incorporating in Ontario

Denis Grigoras

Denis is a lawyer who draws on his background in complex legal disputes and transactions to problem-solve for his clients.

Incorporating a company in Ontario has become more streamlined and accessible thanks to the introduction of the Ontario Business Registry on October 19, 2021. This guide will provide a detailed overview of the incorporation process, from preparing and submitting the required documentation to understanding the fees and legal obligations involved.

INTRODUCTION

Incorporating a company in Ontario has become more streamlined and accessible thanks to the introduction of the Ontario Business Registry on October 19, 2021. This guide will provide a detailed overview of the incorporation process, from preparing and submitting the required documentation to understanding the fees and legal obligations involved.

ONTARIO BUSINESS REGISTRY

The Ontario Business Registry has replaced previous systems, offering 24/7 access and enabling over 90 online transactions. These transactions include incorporating and dissolving companies, expediting processes that were previously done via mail or fax, and providing electronic notifications and documents.

HOW TO INCORPORATE

Incorporating under the Ontario Business Corporations Act (the “OBCA“) is a right, achieved by submitting signed Articles of Incorporation in duplicate, along with necessary documents and fees. The Articles must follow Regulation 289/00 and include all required information. If compliant and fees are paid, the Director files the Articles and issues a Certificate of Incorporation, which commences the corporate existence.

INCORPORATION SERVICES

There are three service delivery choices available for incorporating a business corporation in Ontario:

File Articles of Incorporation electronically via the Internet through one of the Service Providers under contract with the Ministry of Government and Consumer Services.
File Articles of Incorporation in person at the Toronto office of the Ministry of Government and Consumer Services or at certain Land Registry/ServiceOntario offices in Ontario.
Submit Articles of Incorporation by mail to the Central Production and Verification Services Branch, 393 University Avenue, Suite 200, Toronto Ontario M5G 2M2.

DOCUMENTATION

To register a business corporation in Ontario under the OBCA, submit the following:

Articles of Incorporation (Form 1), completed in duplicate with original signatures on both copies.
Newly Upgraded Automated Name Search (NUANS) report, a five-page report of existing corporate names, business names, and trademarks similar to the proposed corporate name. Suppliers can be found at www.nuans.com.
A fee of $300; unless you incorporate electronically (see below), which is recommended, make cheques payable to the Minister of Finance. See this ServiceOntario page for the breakdown of different fees.
A covering letter with contact name, return address, and phone number. If a future incorporation date (up to 30 days ahead) is needed, include it in the letter.
Any required support documents (e.g., legal opinion). Note: Consent to Act as First Director should be kept at the corporation’s registered office, not filed with the Branch.

ELECTRONIC INCORPORATION

Electronic submissions do not need signatures. To file electronically, choose one of the two Primary Service Providers under contract with the Ministry: ecore by Dye & Durham Corporation or ESC Corporate Services Ltd. The Ministry of Government and Consumer Services imposes a $300 fee for electronically filing Articles of Incorporation through a Service Provider. Be aware that the Service Providers may charge extra fees for their immediate online services.

FORMS FOR INCORPORATION

The Ministry has posted interactive Companies Branch forms on its website (http://www.mgs.gov.on.ca/), including Form 1 – Articles of Incorporation and Form 2 – Consent to Act as a First Director. These forms are approved by the Minister under the OBCA and Ontario Regulation 289/00.

ARTICLES OF INCORPORATION

Form 1 refers to 10 specific matters that must be addressed in the Articles, including:

1. Name of the Corporation (including NUANS Search Report): Your corporation’s name is its unique identifier, and it must be distinct from any other business name. Before submitting your Articles of Incorporation, you should conduct a NUANS (Newly Upgraded Automated Name Search) report to check if the desired name is available. The report will reveal any potential conflicts with existing business names or trademarks.

The NUANS report is a critical component of the incorporation process, as it helps ensure that your chosen name is unique and does not infringe on existing businesses or trademarks. To obtain a NUANS report, follow these steps:

1. Choose a suitable name for your corporation: Consider the nature of your business, target audience, and branding goals when selecting a name. Keep in mind that the name must adhere to specific jurisdictional guidelines regarding prohibited words or phrases.
2. Conduct a preliminary search: Before requesting a NUANS report, perform a preliminary search using online resources, such as business directories and trademark databases, to identify any obvious conflicts. This step can save you time and money if your chosen name is already in use.
3. Request a NUANS report: You can order a NUANS report through authorized search houses or online service providers. The report typically costs between $20 and $50 and is valid for 90 days from the date of issue. The report will provide a list of similar names and trademarks that may pose a conflict with your chosen name.
4. Review the NUANS report: Carefully examine the NUANS report to identify any potential conflicts. If your chosen name is too similar to an existing business or trademark, you may need to select a different name to avoid legal complications.
5. Reserve your corporate name: If the NUANS report does not reveal any conflicts, you can proceed to reserve your corporate name with the relevant government authority. This reservation ensures that your chosen name remains available for your use during the incorporation process.

By conducting a thorough NUANS search report and reserving your corporate name, you can minimize the risk of legal disputes and ensure that your corporation’s identity is unique and protected.

2. Location of Registered Office: The registered office is the official address of your corporation for legal and tax purposes. It is where you will receive important documents, including government correspondence and legal notices. Your registered office should be located within the jurisdiction of your incorporation.

3. Number of Directors: Your corporation must have at least one director, but you can choose to have more. Specify the minimum and maximum number of directors in the Articles of Incorporation. Directors must meet certain eligibility requirements, such as being of legal age and not being bankrupt.

4. Directors: Include the full names and addresses of the initial directors who will serve until the first shareholders’ meeting. These directors are responsible for overseeing the corporation’s operations and making decisions on its behalf.

5. Restrictions on Business: If your corporation will have any restrictions on the business activities it can engage in, you must outline these limitations in the Articles of Incorporation. Most corporations, however, choose not to have any business restrictions to maintain flexibility.

6. Authorized Capital: This section outlines the total number of shares your corporation is authorized to issue. It is essential to consider your corporation’s growth potential when determining the appropriate number of shares.

7. Rights and Restrictions of Share Classes: Specify the different classes of shares your corporation will issue (e.g., common shares, preferred shares), along with the rights and restrictions associated with each class. This may include voting rights, dividend entitlements, and liquidation preferences.

8. Restrictions on the Transfer of Shares: Some corporations may choose to implement restrictions on the transfer of shares to maintain control over ownership. If you wish to have any such restrictions, include them in this section of the Articles of Incorporation.

9. Other Provisions: You may choose to include additional provisions in the Articles of Incorporation to address specific corporate governance matters, such as director indemnification, shareholder agreements, or dispute resolution mechanisms.

10. Incorporators: The incorporators are the individuals responsible for filing the Articles of Incorporation. Include their full names and addresses and have them sign the document.

MISCELLANEOUS THINGS TO CONSIDER

“Private” Companies: In Ontario, a “private” company, also known as a closely-held corporation, typically has a smaller number of shareholders, and its shares are not publicly traded. To establish a private company, you can include provisions in the Articles of Incorporation that restrict share transfers, limit the number of shareholders, and prohibit the public offering of shares.
Corporations Information Act: Section 2 of the Corporations Information Act requires corporations to file with the Minister of Government and Consumer Services an initial return setting out the prescribed information as at the date of filing. The initial return must be filed within 60 days after the date of incorporation. It may be filed electronically through the private firms under contract with the Ministry or through the Ontario Business Registry.
Assignment of Number: If you do not wish to choose a specific name for your corporation, the government can assign a number as the corporate name (e.g., 1234567 Ontario Inc.). In this case, you would not need to submit a NUANS report, as the number will be assigned automatically.
Annual Returns: OBCA corporations must file a Schedule 546 Corporations Information Act Annual Return for Ontario Corporations. Since October 18, 2021, annual returns are filed through the Ontario Business Registry. Corporations with returns due between May 15 and October 18, 2021 were exempt. Annual returns update the Registry with changes in directors, officers, and other required information. Failure to file may result in penalties or dissolution. Returns are due six months after the corporation’s tax year-end.

CERTIFICATE OF INCORPORATION

Once you’ve successfully completed the above steps, you’ll receive a Certificate of Incorporation. The Certificate of Incorporation is a crucial document for your newly formed company. It provides legal proof of your company’s existence and establishes its corporate identity. The certificate typically includes the corporation’s name, number, incorporation date, and the Director’s signature.

Once the Certificate of Incorporation is issued, your corporation is officially in existence and can begin operating in Ontario. It’s essential to keep this document in a safe place, as it may be required for various purposes, such as opening a bank account, entering into contracts, or applying for licenses and permits.

POST-INCORPORATION CONSIDERATIONS

After incorporating your company, there are several post-incorporation steps to complete. These include:

Organizational Meeting: The directors must hold an organizational meeting to address matters such as adopting bylaws, appointing officers, issuing shares, and setting the corporation’s financial year-end. You may need to prepare minutes of the meeting to record the decisions made.
Bylaws: Draft and adopt bylaws that outline the rules and regulations governing the corporation’s internal affairs. These should cover topics like director and officer appointments, shareholder meetings, and the issuance and transfer of shares.
Corporate Records: Establish and maintain a corporate minute book, containing essential documents such as the Certificate of Incorporation, bylaws, minutes of meetings, and shareholder and director resolutions.
Business Number and Tax Accounts: Register for a business number with the Canada Revenue Agency (CRA) and open necessary tax accounts, such as corporate income tax, payroll, and sales tax accounts.
Licenses and Permits: Depending on your corporation’s industry and location, you may need to obtain specific licenses or permits to operate legally.
Insurance: Assess your corporation’s insurance needs and obtain the appropriate coverage to protect against potential risks and liabilities.
Reporting and Compliance: Ensure ongoing compliance with the OBCA and other applicable laws by filing annual returns, maintaining corporate records, and keeping up-to-date with any changes in legislation.

In conclusion, incorporating a company in Ontario involves several critical steps, from choosing the right name to filing the necessary documents and paying the required fees. By following the incorporation procedure outlined in this blog post, you can successfully establish your company and ensure it operates within the boundaries of the law.

Remember that the incorporation process can be complex, and it’s essential to understand the legal and regulatory requirements. Seeking professional advice from a lawyer or accountant can help ensure your corporation is set up correctly and remains compliant with all applicable laws and regulations.

With a solid understanding of the process and careful attention to detail, you’ll be well on your way to launching a successful corporation in Ontario. Good luck in your new venture!

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February 11, 2023

Making a Statement: The Role of Affidavits in the Legal System

An affidavit is a document used in legal proceedings that comprises a witness’s statement of facts or opinion. The witness attests to the document, and the affidavit is taken by an authorized individual. This individual, known as the commissioner, confirms the witness’s identity and delivers the oath or affirmation that the document’s contents are accurate. The witness, not the commissioner, is responsible for determining the statement’s truth.

February 10, 2023

Cancelling a Contract: Understanding the Different Options

A contract is a legally binding agreement between two or more parties that outlines their respective rights and obligations. But what happens if one of the parties wants to get out of the contract? In some cases, a contract can be voided, which means that it is deemed to have never existed legally.

February 6, 2023

Making the Most From Your Car Accident Claim: General Damages

In the event of a motor vehicle accident, individuals who are insured may also have the option to file a companion lawsuit against the responsible driver. Both the tort case and the insurance claim can have a significant impact on each other, and it is important for counsel to understand the interplay between the two.

February 5, 2023

The Power of Reliance: Making Promises Stick

In the realm of law, promises play an essential role, particularly regarding the protection of reliance. This post will be about the protection of reasonable reliance on statements made by a party to a contract or a potential contract. In a contract, the preservation of one party’s reliance may be equally as significant as the protection of both parties’ reasonable expectations.

February 5, 2023

What to Expect When You Default on a Mortgage

When a default occurs, the mortgagee, or lender, has the right to accelerate the mortgage payment or seek specific performance or damages. They can also sell the property to repay their debt. If the sale proceeds are less than the mortgage debt, the mortgagee can sue the borrower for the deficiency. If the sale results in a surplus, the mortgagee must pass it on to the next encumbrancer or the borrower.

February 4, 2023

The Self-Contained World of Letters of Credit

Letters of credit (LC) and bank guarantees are financial tools used to secure payment obligations. However, they differ from regular guarantees in terms of the defences against payment demands. An LC is simply an agreement to pay under certain conditions, and the law governing LCs is determined by the national jurisdiction where the LC is issued.

February 2, 2023

Whistleblower Protection: Overview of Ontario and the U.S.

In Ontario, a program, known as the Whistleblower Program, was made available for public comment in 2015 and includes a confidential submission process for individuals to provide information to the OSC. In contrast, whistle-blower protection laws in the United States have a long history dating back over 150 years.

January 28, 2023

Global Mobility and Tax Residency: A Canadian Perspective

As the world becomes more connected, it’s becoming more common for Canadians to spend extended periods of time outside of Canada. With careful planning, it’s possible for Canadians to cease being a resident for Canadian income tax purposes, without giving up their Canadian citizenship.

January 27, 2023

The Entrepreneur’s Roadmap to Incorporating in Ontario

Denis Grigoras

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