Should You Incorporate Your Corporation In Ontario or Federally?

Once you have decided that it is best for you to carry on your business as a corporation, the next step is to determine in which jurisdiction to incorporate – provincially (in Ontario) or federally. Corporations are incorporated provincially under the Business Corporations Act (Ontario) (“OBCA”) or federally under the Canada Business Corporations Act (“CBCA”).

The following are key considerations in determining where to incorporate:

1. Ability to carry on business in different jurisdictions
– A corporation incorporated under the CBCA has a constitutional right to carry on business and use its name in all provinces. All it needs do is file a prescribed form of notice in each province in which it carries on business.
– A corporation incorporated under the OBCA will have to obtain an extra-provincial licence in any other province it wishes to carry on business. There can be substantial costs with obtaining each extra-provincial licence, and the name of the Ontario corporation may not be acceptable in the province where the extra-provincial licence is sought.

2. Name Approval
– The federal incorporating authority under the CBCA carefully scrutinizes proposed corporate names and may reject a proposed name.
– On the other hand, Ontario will accept almost any name that is not identical to an existing name and otherwise complies with the regulations.
– The names of federal corporations are automatically protected across Canada (except in Quebec) at the time of incorporation.
– For Ontario corporations, the business name is reserved and approved only for use in Ontario.

3. Recognition
– If the corporation will be carrying on business outside of Canada it may be preferable to incorporate federally under the CBCA because foreign parties might know nothing about provinces within Canada.

The foregoing considerations are not exhaustive. Whether your corporation should be incorporated provincially or federally depends on your unique circumstances.

BUSINESS LAW FEBRUARY 2017

We are experts in all matters related to the incorporation of businesses. If you are considering incorporating a business, or are concerned about how our corporation is currently organized, contact us today.

Need advice? If you need help, contact Mihkel Holmberg or Kate Watson for expert legal advice concerning your business.

Our Lawyers

Mihkel Holmberg
mihkel@holmbergwatson.ca
416.648.8499

Kate Watson
kate@holmbergwatson.ca
647.500.0844

Peter Math
peter@holmbergwatson.ca
416.274.4752

Adam Holmberg
adam@holmbergwatson.ca
437.995.930

This newsletter is produced by the business lawyers at Holmberg Watson Business & Estate Lawyers. The information in this newsletter is general information only and should not be considered exhaustive or treated by readers as legal advice and ought not be relied upon without further, detailed legal counsel being sought.

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