An independent legal entity that is separate from the people who create it.
Corporations have shareholders and officers.
Corporations can sue and can be sued.
Exist indefinitely unless dissolved.
Solely responsible for its liabilities.
In Ontario corporations are governed by Ontario business Corporation Act (OBCA) or Canada Business Corporation Act (CBCA).
Advantages and Disadvantages:
Owners and directors are protected against liability.
Advantageous tax planning and estate planning strategies are available.
Structuring corporations properly can save great deal to its shareholders.
An offering corporation can raise funds by offering more shares.
Expensive to create.
Client has to decide to create an offering or noon-offering corporation.
Involves conducting a name search, filing articles of incorporation, preparing minute books, by laws and resolutions.
Listing shareholders, officers, directors and preparing share certificates.
Arrange and keep track of yearly meetings.
File annual income tax returns.
Registration:
Corporations can be registered under Ontario law or Federal law.
If an Ontario Corporation wants to extend its business to other provinces it needs to register an extra provincial corporation in other provinces.
If a corporation in another province is registered under same name as Ontario Corporation, it must operate under a different name.
Foreign country may require a federal corporation instead of a provincial corporation to operate in that country.
A federal corporation may run business in any province in Canada.
Canadian controlled private corporations are eligible for small business deductions for income tax purposes.
Disclaimer:
This information is for educational purposes only. It does not constitute any legal advice or opinion. Please do not use any of its contents without seeking a professional advice.
References:
The fundamentals of corporate law and procedure
By Mark Walma and Patricia McCann – Smith
Publisher: Edmond Montogomery Publications Limited, Toronto, Canada.