BC & FEDERAL INCORPORATION

After deciding whether incorporation is the right structure or not for any business, the next question is whether to incorporate Federally (under the Canada Business Corporations Act) or provincially (under applicable provincial legislation) and then, if provincially, which province.  Some forms of business must be incorporated federally (for example, railways or telecommunications); some professional businesses must be incorporated provincially (for example, doctors and lawyers) and some businesses may choose the jurisdiction based on the scope of their intended business and the relevant advantages offered by incorporating in a particular jurisdiction.  By far, most businesses are formed under provincial legislation.

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One unique advantage of British Columbia incorporation is that, unlike Federal corporations and corporations incorporated under many other provincial legislation in Canada, a B.C. company does not have any director residency requirements (ie. other Canadian jurisdictions may require a board of directors that has a majority of Canadian residents and/or at least one director resident in the jurisdiction.  

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Companies are incorporated in B.C. according to the provisions of the British Columbia Business Corporations Act.  Incorporation requires a name approval and reservation process (unless a "numbered company" will be used); preparation and execution of an Incorporation Agreement identifying the "incorporators" of the company and adopting Articles; completion and filing of an Incorporation Application and Notice of Articles; and the preparation of the required initial organizational resolutions, registers and  other documents of the initial shareholders and directors.

It is sometimes preferred that a business with Canadian national ambitions, international exposure or dealings with U.S. investors (who may be more familiar with the structures and terminology used under Canada's federal statute) seek Federal, as opposed to provincial, incorporation.   Some other forms of business must be incorporated federally (for example, railways or telecommunications).

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One unique advantage of Federal incorporation is that, constitutionally, a Federally incorporated corporation is entitled to do business in each province and territory of Canada under its Federally incorporated name. However, it must be understood that this does not mean that a Federally incorporated corporation is entitled to do business in each province and territory of Canada period.  Provincial laws may still apply that require a Federally incorporated corporation to extra-provincially register in that province resulting in additional filings and costs.  For this reason a Federal incorporation is not the automatic choice of a business that intends to operate in multiple provinces in Canada.  

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Corporations are incorporated Federally according to the provisions of the Canada Business Corporations Act.  Incorporation requires a Nuans search and/or name pre-approval process (unless a "numbered company" will be used); preparation and execution of Articles of Incorporation and adoption of By-laws; completion and filing of the Articles of Incorporation; and the preparation of the required initial organizational resolutions, registers and  other documents of the initial shareholders and directors.

British Columbia companies must have a Registered and Records Office Address (delivery and mailing) as part of their record at the Corporate Registry. A company's Registered Office is the location where legal documents can be served. A Registered Office delivery address must be for a location in B.C. that is accessible to the public between 9 a.m. and 4 p.m. on regular business days for the service of documents. The Registered Office mailing address is the address where the Corporate Registry will send important information to the company. A company's Records Office is the location where all the records for the company are kept. The Records Office delivery address must be for a location in B.C. that is accessible to the public between 9 a.m. and 4 p.m. on regular business days for the inspection of records. The mailing addresses, if different from the delivery addresses, must be a postal address in British Columbia. These addresses are public information.

Federal corporations must have a Registered Office Address as part of their record at the Corporations Canada. A corporation's Registered Office is the location in a province or territory within Canada, designated in the Articles of Incorporation, where legal documents can be served during normal business hours.  Federal corporations must also keep prescribed records at its Registered Office or such other place designated by the directors of the corporation. The Registered Office address is public information.  

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In order to keep either a B.C. company or Federal corporation in good standing, such company/ corporation must file with the applicable registry an Annual Report and pay a filing fee within a prescribed period of time.  B.C. companies and Federal corporations must also attend to certain prescribed annual business such as financial statements, auditors and shareholder meetings. The failure to attend to Annual Reports and/or prescribed annual business can result in a company/ corporation being the subject of involuntary dissolution proceedings initiated by the applicable registry, shareholder legal claims, extended director liabilities and/or loss of corporate assets.

If your company or corporation will "carry-on business" in a Canadian province or territory other than your company's or corporation's jurisdiction of incorporation (including if you incorporate federally but carry on business in British Columbia), applicable legislation may require registration in each province/territory where business activity occurs. Generally, a company is deemed to be “carrying on business” in the province if it holds title or interest in land, maintains an office, warehouse, place of business or telephone, or has a resident agent or representative, or it is otherwise carrying on business in that province.

Registration requires a name approval and reservation process, identification and appointment of an Attorney resident in B.C. and the completion and filing of a Registration Statement. In order to keep extra-provincial registration in good standing a company or corporation must file with the B.C. Corporate Registrar an Annual Report and pay a filing fee within a prescribed period of time.