Incorporating a Business Corporation

• Author: Tina Kamakaris/Jane Kamakaris/Louis Kamakaris
• Pages: 459-476

459

Chapter 26 Incorporating a Business Corporation

CHAPTER 26

e provincial and territorial business corporation statutes are roughly the same across

Canada. In most Canadian jurisdictions, business corporations are created by ling articles

of incorporation with the appropriate government agency; therefore, the discussion in

this chapter on creating an Ontario business corporation also applies to other provinces/

territories, with appropriate modication.

INCORPORATING AN ONTARIO BUSINESS CORPORATION

Ontario business corporations are incorporated under the Ontario Business Corporations

Act. e Ontario Ministry of Government

and Consumer

Services administers all

incorporations. Ontario business corporations are created by completing and ling a form

known as articles of incorporation. Each part of the form is referred to as an article;

hence, articles of incorporation. Once the ministry approves the articles of incorporation,

it issues a certicate of incorporation. e certicate of incorporation creates the

business corporation, and the approved articles of incorporation become the corporation’s

permanent foundation.

MANDAMO PROPERTIES LTD.

Re: Incorporation

Since sixth grade, Tom and Steve Brown have dreamed of conquering both land

and water. When they would grow up, they would buy or lease land on which they

would build parks and amusement resorts, and they would also charter steam vessels

to carry passengers and freight on lakes, rivers, and other navigable waters. ey

would be rich. ey would call their company Mandamo Properties Ltd.

We begin the incorporation of Mandamo Properties Ltd. with the preparation of the

articles of incorporation, Precedent 26.1. We have also conducted a NUANS search,

Precedent 26.3.

PRELIMINARY CONSIDERATIONS

Jurisdiction If the corporation will operate only within Ontario, incorporation would

be under the Ontario Business Corporations Act (OBCA). If the corporation intends to

also operate in another province, the corporation must, after incorporating in Ontario,

make an extra-provincial registration in the province in which it intends to do business,

INCORPORATING

A BUSINESS

CORPORATION

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460 Legal Office Procedures

e.g. Nova Scotia. If the corporation will operate in every province, the corporation would

be incorporated under the Canada Business Corporations Act.

Incorporating a new or existing business A client may want to start a brand

new corporation or convert their existing sole proprietorship or partnership into a

corporation. In either case, the incorporation process begins with preparing and ling an

articles of incorporation.

NAME OF CORPORATION

A corporation may use any name that is not likely to deceive or confuse the public. e

responsibility for ensuring that the name neither deceives nor confuses rests with the lawyer

(not the ministry). Whether incorporating an existing business or a new one, the proposed

name of the corporation should consist of three elements: distinctive, descriptive, and legal,

e.g. Telfax Communications Limited, respectively. e legal elements and their French

equivalents are as follows: Limited, Limitée, Incorporated, Incorporée, or Corporation, or

the corresponding abbreviations: Ltd., Ltée., Inc., or Corp. e legal element is a must; it

readily distinguishes a corporation from an unincorporated business:

Unincorporated Business Incorporated Corporations

Telfax Communications Telfax Communications Limited

Paper Plates Company Paper Plates Company Inc.

e name of a corporation must not be identical to the name of another corporation,

partnership, sole proprietorship, association, or individual. Also, it must not contain

words that imply the corporation is not a business corporation, e.g. a club, or words that

suggest the corporation is connected with the federal or provincial government, or words

such as college, institute, or university that suggest the corporation is a post-secondary

educational institution, except with the written consent of the government. Generally,

the proposed name may be in English only, French only, or English and French, with the

use of letters from the Roman alphabet or Arabic numerals or a combination of them.

Number name When a distinctive name of the corporation is not a priority, the cor-

poration may use a number name such as 123456789 Ontario Inc. e ministry assigns

the number upon receipt of the articles of incorporation. Note that for corporations with

number names, the number name and the corporation number, i.e. the number which the

ministry endorses on the corporation’s certicate of incorporation, is one and the same, e.g

the corporation number for 123456789 Ontario Inc. would be 123456789.

Trade name Corporations may incorporate under one name and carry on business under

a trade name. e trade name may belong to an incorporated or unincorporated business

and must be related or aliated to the user corporation. e law allows the use of trade

names to minimize business losses that may occur if the name is changed: for example, if Iggie

Corporation were to buy a Tim Hortons shop, Iggie would want to continue the business

under that trade name because the business is already well known by that name. To ensure the

user corporation does not evade responsibility through the use of a trade name, the law deems

the user corporation, e.g. Iggie Corporation, responsible for the business it trades as. e user

corporation must register the trade name with the ministry. When a corporation incorporates

under one name but does business under “a better known as” name, it is said to be trading as

Legal TIP

Generally, the word

company is used to refer

to an unincorporated

business as well as

to an incorporated

corporation.

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