Procedures for setting up a company in Canada

Canada, with its dynamic business environment and supportive policies, has always been an attractive destination for those who cherish their dream of starting a business. However, to turn a business idea into a legal entity, mastering the process of forming a company is extremely important. Viet An Law will guide you through the basic steps to set up a company in Canada through the article below.

Choosing the legal level of a company in Canada

Investors will need to choose between registering the company at the federal (national) level or at the provincial/territorial level. Investors need to consider the size of the business to be able to make the right choice. Below is a comparison table between the two levels of legality:

 Register a company name for setting up in Canada

After deciding on where to incorporate, the next step is to choose and register a name for your company. In Canada, you have two main options: register a unique name for the company or use a numbered name.

Company with Own Name

Choosing a unique name for your company allows you to create a unique and recognizable brand identity. However, you need to note the conditions for naming as follows

• Choose a unique and non-confusing name: The name you choose should be significantly different from the names of companies that already exist to avoid confusion for customers and stakeholders. The name must also not contain words that are prohibited or may be misleading about the nature of your business. A company name with a proper name must have a legal suffix to indicate the legal form of the company, e.g., (short for Incorporated), Corp. (short for Corporation), and this suffix must be added to the end of the company name.
• Check availability and compliance with naming regulations: Before you officially register, you need to conduct a check to make sure that the name you choose is not in use and complies with the naming regulations issued by the federal or provincial regulatory authorities.
• NUANS Report: NUANS stands for Newly Upgraded Automated Name Search. It is a comprehensive system that contains information on the names of registered companies and trademarks in Canada. The NUANS report is a document that proves the company name is available for registration. The NUANS report is generally a mandatory requirement for company registration at the federal level and in many provinces/territories (with some exceptions such as British Columbia – BC). Double-check the specific requirements of where you plan to apply. The NUANS report is usually valid for 90 days from the date of issue.

Numbered Company

The numbered company name means that the Company will be given an automatic number according to a certain structure, e.g., 1234567 Canada Inc. This number is usually generated based on a unique registration number. The process of registering a numbered company is usually faster and the cost can be lower than registering a private name because there is no need to go through the complicated name review and approval process due to the lack of a NUANS Report.

However, even though the company’s legal name is a sequence of numbers, you can still register an additional “trading name” (aka “doing business as” – DBA) to deal with customers under a name that is more memorable and more relevant to your business. The registration of a trade name is usually done after the company has been incorporated.

Preparation of documents for setting up a company in Canada

Drafting the company’s charter

The main mandatory contents to be included in the company’s charter include:

• Company name;
• Registered address;
• Initial Director Information;
• Equity Capital Structure;

Appointment of a Director

Once the Articles of Incorporation have been drafted, the next step is to appoint the persons who will take on the role of directors of the company.

• Minimum number of directors: As a rule, the company must have at least one director. The maximum number of directors may be specified in the Company’s Charter or other legal documents.
• Check the director’s residence information:
  • Federal and some provinces/territories: Requires at least 25% of the number of directors to be Canadian residents. A Canadian resident is a Canadian citizen or permanent resident of Canada. If the company has fewer than four directors, at least one of them must be a Canadian resident.
  • Some other provinces (e.g. British Columbia – BC, New Brunswick – NB, Nova Scotia – NS…): There are provinces that do not require directors to be Canadian residents.

Apply for setting up a company in Canada

List of documents to prepare

• Establishment Charter;
• The NUANS Report notes that the NUANS Report is due within 90 days;
• Additional Information/Forms: Depending on the registry (federal or provincial/territory) additional documents may be required.

Submit the dossier at the competent authority

• Federal Registration: Applications need to be filed with Canadian Corporations. Usually, the application process is done through the online portal on the Corporations Canada website. You will need to create an account and follow the instructions on the system. In some cases, there may be an option to apply by mail, but the online form is often recommended because it is faster and more convenient.
• Provincial/Territorial Registration: The dossier needs to be submitted to the Business Registry of the province or territory where you wish to establish your company. Similar to the federal government, many provinces/territories can now also file online. Some provinces/territories may still accept applications by post or in person at the office.

Once your application is accepted, the registrar will process and issue a Certificate of Incorporation. This certificate will be sent by email if you submit your application online or by mail to the company’s registered address.