What Are Articles of Incorporation?
You came up with an idea for your business, determined its structure, and picked a name for it—great job! But your work isn’t done yet. You still need to get your business registered.
In Canada, businesses that wish to be recognized as corporations need to take some steps to earn the Inc. label. One of the requirements is the articles of incorporation.
Articles of incorporation are documents that business owners must file with a government body to get their businesses legally categorized as corporations.
These mostly contain essential information about your business, including its name, its registered address, the board of directors, etc.
In Canada, you can either incorporate your business federally or provincially. The former allows you to protect your business name across the entire country, while the latter only registers your business name in your jurisdiction.
Here’s everything else you need to know about the matter:
The Importance of your Articles of Incorporation
Without articles of incorporation, your corporation can’t be recognized by the law, which means your business runs as a regular company without shareholders or a separate legal entity.
It means as a business owner, you’re not protected from the company’s debts. Incorporating your business means gaining liability protection, and until you file the articles of incorporation, that’s not possible.
Corporations also get plenty of benefits when it comes to taxes, which can’t be said about regular companies.
On top of that, you can’t sell stock unless you file the documents and get the confirmation that your business is officially a corporation. Until then, you won’t be able to raise capital by selling shares.
Filing Process and What Happens After?
Once you’ve chosen a structure and a name for your business, you can start creating the articles of incorporation.
But first, you have to choose whether you’re filing it federally or provincially. Federal incorporation is often favored because it registers your business name in the entire country, which offers more protection. However, it comes with more conditions, like having at least 25% of the board of directors Canadian residents.
If you go for provincial incorporation in British Columbia, you won’t have to fulfill the same requirements. Both incorporation types allow you to operate your business in all provinces.
After you decide on the type of incorporation and create the articles, you can file them online through ISED or by mail, but the online route is faster. There’s also an express service available at an additional cost.
In addition to the documents, there’s a submission fee that you have to pay when filing, but it differs from one province to another.
In British Columbia, it costs $30 CAD to approve the name and $350 to file the articles of incorporation (provincial).
Once you submit the articles of incorporation and pay the fee, you can wait for your form to be approved. Afterward, you can create bylaws, issue stock, and hold meetings with the directors and shareholders.
The Form - What’s Included:
The articles of incorporation vary from Canada to the US and from one state to another. Here’s what you should include if you wish to legalize your corporation in Canada:
Corporation Name
Your corporation name of choice must be new and not already trademarked. Otherwise, you won’t be able to register it. You can check for availability through a quick search on Nuans.
Corporation’s Registered Address (incl. province/territory)
You’ll need to provide the registered address of your corporation, plus the province or territory where your office will be.
Number of Range of Directors/Incorporators
A form for articles of incorporation must include the information of everyone included in the business. That includes incorporators, directors, or owners.
The information should include their names, addresses, plus any other required info.
Statement on Share Classes
Corporations are usually run by a board of shareholders, where each holder owns a portion of the total shares. Your business can have multiple share classes to classify the shareholders into groups.
Share classes are different types of stock your business issues, and they carry certain restrictions for ownership and give different rights to the shareholders. Here’s a rundown of the more common share classes and what they allow:
Class A: Typically meant for new investors, and it allows one vote for each share.
Class B: Offer more voting rights and rights to capital, and may allow more than 10 votes per share. Usually meant for early investors.
Class C: Meant for shorter-term holding periods, and it doesn’t allow voting rights.
The share classes of your business must be determined in your articles of incorporation
Statement on Share Transfers
Some corporations create restrictions on share transfers. Such information needs to be clarified in the articles of incorporation, but you can leave it blank if your business requires no restrictions.
Names of Incorporators
The names of the incorporators must be clarified in the articles of incorporation.
Your business can have one or more incorporators, who are the main stockholders at the moment of filing the articles.
In both cases, an incorporator takes on the responsibility of handling the details of the filing.
Bottom Line
Understanding the process of creating and filing the articles of incorporation isn’t complicated, but it’s recommended to have a team of expert legal advisors by your side.
You’ll be dealing with sensitive information and preparing for your business to finally get its corporate certification. So, consider hiring a legal advisor to handle the details for you. Parr Business is ready to help with that!
TL;DR
Articles of incorporation are documents that you need to file with a government body to legally register your business as a corporation.
They usually include your corporation’s name, registered address, board of directors, share classes, etc. The fastest way to file them is online through ISED.
In British Columbia, getting a name approval costs $30 CAD and filing the articles of incorporation costs $350.
