Canada Corporation (Quebec)
Formation of Canada (Quebec) Corporation
If a corporation’s name does not include the term “société par actions” or “compagnie”, it must comprise the abbreviation “s.a.”, “ltée” or “inc.” at the end to indicate that the corporation is a limited-liability corporation. “Corporation/ Corp and Incorporated / Incorporée are not acceptable terms to be used for legal endings. The most used legal ending by default is INC. A Quebec company’s name must have a French version in addition to any other language (including English). Alternatively, a Quebec company may be assigned a number as its legal name (for example. 123456 Quebec Inc.). This speeds up the incorporating process and permits immediate delivery of the Articles of Incorporation.
Any person may own a share, and this includes individuals, corporations and trusts. Shares are a form of property, and can be bought and sold. However, these rights may be subject to any limitations that may be set out in the Act, the Articles, by-laws, shareholders’ agreements, etc. The crucial matter is the proportion of shares that is initially issued to each shareholder, rather than the actual number. For example, if there are 2 shareholders and each is to have 50% interest in the company, it is irrelevant whether each shareholder receives 10 shares or 10,000 shares each, since in either case, both receive an equal proportion of the shares. In general, there are three types of rights associated with shares; the right to vote, the right to receive dividends and the right to receive the remaining property of the corporation upon dissolution. These rights can be divided among different types or classes of shares. Normally, the Articles of Incorporation will provided that an unlimited number of shares can be issued of each class. Classes can be assigned names (e.g. common, preference, non-voting) or simply be listed (e.g. Class A, Class B, Class C). Every private company must have at least 1 shareholder and there may be several (but not more that 50) shareholders. The complete residential address of each shareholder is needed.
Directors are the individuals who administer the affairs of the company and make all major decisions for the company. Every Quebec private company must have at least 1 director, and there may be several. Only individuals may be directors of a company. There is no residency requirement for directors.
The positions and powers of officers are to be set out in the Articles, by-laws and/ or resolutions of the corporation. A corporation must have a President and a Secretary. It is possible for one person to fill all positions. A shareholder and/or director may also serve as an officer. Usually it is the President who has over all responsibility for the running of the business. The Treasurer is the one who must issue the shares but also usually looks after the accounting. The Secretary is responsible for ensuring that minutes are taken at meetings, and the corporate records and Minute Book are properly kept. Only individuals are may be officers of the company. There is no residency requirement for officers.
A Quebec company must have a registered office within Quebec. The purpose of the registered office is to establish a location where official forms and notices can be delivered to the company. A post office box may not be used as a registered office address.
Newly formed corporation should hold its first meeting of directors (called an organizational meeting)shortly after incorporation. The orders of business of an organizational meeting are usually to appoint officers, issue shares, make by-laws, appoint an auditor until the first meeting of shareholders and make banking arrangements. The first annual meeting of shareholders must be called within 18 months following incorporation. After the first meeting, the directors must call an annual meeting not later than 15 months after its last meeting and not more than 6 months after its financial year end.
Time Needed For Formation
Usually 18 working days.
Corporations resident in Canada are liable for taxation on their world-wide income, but a non-resident corporation is liable only on income from business carried out in Canada, and disposal of Taxable Canadian Property (which includes but is not limited to: real and resource property situated in Canada, shares of a Canadian corporation other than a widely traded public corporation, shares of a resident private corporation, capital property used during the course of Canadian business, and certain interests in partnerships or trusts). Until 2001, the basic federal rate of corporate income tax at was 38%, reduced to 28% by an abatement on a corporation’s taxable income in a province or territory. The (abated) rate was reduced to 25% under a plan announced in 2000, and then further cut from 25% to 23% from January 1, 2003, with a final reduction to 21% which took place in 2004. Provincial tax cuts were also announced. (NB This is an approximation of what is in fact a complex system, distinguishing between Active and Passive income, and between Manufacturing and Processing income and other Active income) There are further concessions for small businesses.
A fiscal year-end is the official last day of the fiscal year of a company. The fiscal year-end does not necessarily need to be 31st of December. Shareholders of a private company may choose not to appoint an auditor for any given fiscal year and all the shareholders must agree to this decision. However, the decision is valid until the next annual meeting, where all the shareholders must once again decide in not appointing an auditor for the following fiscal year. A Quebec company must file annual returns with the respective authorities.