Now that you have received your certificate of incorporation, the next step is to complete the internal organization of the corporation.
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Organizing your corporation
When you incorporated, you filed a form entitled Form 2 – Initial Registered Office Address and First Board of Directors. This form lists the first members of the board of directors of your corporation.
The mandate of the first directors begins on the date Corporations Canada issues the certificate of incorporation and ends at the first meeting of shareholders. At that first meeting of shareholders , the shareholders elect the corporation's directors. The shareholders can elect the first directors or elect other individuals.
Early in the life of your corporation, an incorporator or a director will likely call an "organizational meeting." The notice for this meeting must be sent at least five days before the meeting to each director listed in Form 2 – Initial Registered Office Address and First Board of Directors. This notice must indicate the date, time and place of the meeting.
At this meeting, the directors can:
- make by-laws (see Making by-laws; these by-laws will have to be approved by shareholders at the first meeting)
- adopt the forms of security certificates (shares) and corporate records the corporation will use
- authorize the issuing of shares (see Issuing shares ) and other types of securities
- appoint officers (see Appointing the officers)
- appoint an interim auditor to hold office until the first meeting of shareholders
- make banking arrangements
- take care of any other business.
By-laws are rules that govern the internal operations of a corporation. For example, you might want to set some rules for your corporation that are not dealt with in the Canada Business Corporations Act (CBCA). You also might want to modify some of the rules that are in the CBCA , as long as those changes are permitted by the Act. Some model by-laws can help you with content and wording.
Among other things, your by-laws can:
- set the date of your corporation's financial year-end
- make banking arrangements
- address the appointments, qualifications and duties of officers
- delegate the responsibility for setting the salaries of directors and officers
- establish the salaries or other remuneration of directors and officers
- set down the procedures for calling and conducting directors' and shareholders' meetings
- establish the minimum number of people required at directors' and shareholders' meetings to establish quorum (that is, enough people to make binding decisions)
- make rules limiting the modifications that can be made to the powers given to corporate directors under the CBCA (for ex., the by-laws could make all share issuances subject to shareholder approval).
Unless your corporation's by-laws state otherwise, the directors have the power to make, repeal and amend the by-laws. Every new by-law and any by-law change (including the repeal of a by-law) require shareholder approval at the first regular meeting of shareholders after the directors have passed the new or amended by-law. The effective date of a by-law is the date it is passed by the directors, not the date of approval by shareholders.
One of your corporation's first activities following incorporation will be to issue shares. A person becomes a shareholder when a corporation "issues" shares in that person's name. Unless you indicate differently in your articles of incorporation or by-laws, your corporation's board of directors can generally issue shares whenever it wishes, to whomever it chooses, and for whatever value it decides.
Directors can decide to issue shares by majority vote. The directors' decision (called a resolution) to issue shares must be recorded in the corporation's minute books.
The corporation cannot issue a share until it actually receives full consideration (payment) for that share. This consideration is generally in the form of money, although it can also be in the form of services or property given to the corporation. A person's payment for the share(s), in a form agreed upon by the directors, represents that person's investment in the corporation.
Once a share has been issued, the shareholder is entitled to a share certificate. This certificate must state:
- the corporation's name, as set out in the articles of incorporation
- the name of the shareholder
- the number and class of shares it represents.
If your articles of incorporation contain restrictions on share transfers (as do the articles of most small corporations), the share certificate itself must refer to these restrictions.
All shares are without nominal value (also known as par value). A share certificate does not carry any monetary value and no value appears on the certificate.
Appointing the officers
Officers are responsible for the day-to-day operations of the corporation. The directors are responsible for appointing officers. With the directors, the officers will form the management of the corporation. Officers can take any position that the directors want them to fill (for ex., president, secretary or any other position).
First meeting of shareholders
The directors of your corporation must call the first shareholders' meeting within 18 months of the corporation's date of incorporation. This meeting is usually held after the first organizational meeting of the directors.
At this meeting, the shareholders:
- elect directors
- if the directors change from those you indicated on Form 2 – Initial Registered Office Address and First Board of Directors, you will need to file the change regarding directors (see Filing changes regarding directors)
- confirm, modify or reject the by-laws established by directors
- appoint an auditor. Note that this auditor can either be the same one appointed by the directors or a different one.
Keeping your corporation in good standing
To make sure that your corporation continues to benefit from incorporation under the CBCA , you need to fulfill certain requirements with Corporations Canada. Depending on the type of requirement, you need to file annually or when circumstances change. Namely, you must do the following filings:
- Filing an annual return: Filing an annual return for a business corporation provides up-to-date information to Corporations Canada.
- Filing the ISC information: Information on the corporation's individuals with significant control (ISCs) must be filed at the same time as the annual return. Changes to ISC information must also be filed within 15 days of a change in the corporation's ISC register.
- Filing a change of registered office address: Your registered office address is the official address for communications with your corporation.
- Filing changes regarding directors: Interested stakeholders have a right to know who the current directors are and where they can be reached.
- Amending your articles: Your articles set out basic information about your corporation.
Filing an annual return
Regardless of the size of your corporation, you are obligated to file an annual return if your corporation's legal status is "active" (that is, not dissolved, discontinued or amalgamated with another corporation). You can find the status of your corporation on Search for a federal corporation.
Your annual return is not your corporation's tax return, which must be filed with the Canada Revenue Agency. To avoid a potential administrative dissolution, you must file your annual return.
If you are no longer operating the corporation, you can dissolve your corporation (see Dissolving a business corporation), which means that you are legally terminating its existence.
Your annual return must be signed by an individual who has the relevant knowledge of the corporation and who is authorized by the directors.
Corporations Canada offers several different ways to file (see How to file and pay for an application). If you file online, you will receive an email confirmation that your annual return has been processed. Keep the original signed annual return with the corporate records.
The annual return is a document that provides information about your corporation. This information lets Corporations Canada make sure that your corporation complies with certain requirements of the CBCA .
It also allows Corporations Canada to keep its database of federal corporations up to date. This information is made available to the public on Search for a federal corporation. The information found in the database allows investors, consumers, financial institutions and many others to make informed decisions about your corporation.
Every corporation must submit an annual return every year to Corporations Canada within 60 days of its anniversary date. The anniversary date is the month and day on which the corporation was created or the date on which the corporation first came under the jurisdiction of the CBCA (be it the date of incorporation, amalgamation or continuance). You do not need to file for the year the corporation was incorporated, amalgamated or continued.
For a corporation that has been revived, the anniversary date remains the date on which it was created (be it the date of incorporation, amalgamation or continuance).
Your anniversary date can be found on your corporation's certificate of incorporation, amalgamation or continuance. You can also find your corporation's name on Search for a federal corporation.
If you file your annual return before the anniversary date, it will not be accepted because the annual return must reflect the corporation's situation on its anniversary date of each year.
If you do not file your annual return on time, the status of your corporation's annual filings on Search for a federal corporation will be displayed as "overdue" and your corporation will not be able to obtain a certificate of compliance (see Certificates of compliance and certificates of existence).
Corporations Canada will send a personalized reminder notice when your annual return is due. If you do not file on time, you will receive a default notice approximately 90 days after your anniversary date.
The reminder notice and default notice will be sent by email if you have subscribed to Annual return reminder emails. If you have not subscribed to this service, you will receive these notices by post at either your corporation's registered office address or at any additional address you might have provided to Corporations Canada.
Consequences of not filing an annual return or the ISC information
Corporations Canada has the power to dissolve a corporation that has not filed its annual returns or its ISC information. Dissolution can have serious repercussions, including not having the legal capacity to conduct business.
Some corporations, especially small businesses, might not always be aware of these filing requirements. While the law allows Corporations Canada to dissolve a corporation after one year of non-filing, the policy is to only dissolve a corporation when it has not filed an annual return for two years.
After that period elapses, Corporations Canada will send a final notice warning of the intention to dissolve the corporation and provide an additional 120 days to file the required annual returns or ISC information. This final notice will be sent by post to all valid addresses Corporations Canada has on file (including current directors' addresses). Further, the name of the corporation to be dissolved will be published in Monthly transactions.
If the corporation does not respond, Corporations Canada will issue a certificate of dissolution following the expiration of the deadline stated in the notice.
You can revive a corporation after it has been dissolved (see Reviving a business corporation).
Filing a change of registered office address
You must notify Corporations Canada of any change to your corporation's registered office address (for ex., if the corporation moves) within 15 days following the change. You can also provide an additional address, if there is one.
The registered office address, even if it is also a residential address, is corporate information that is public (see Public disclosure of corporate information) and will be published on Search for a federal corporation.
If the additional address for the corporation is different from the new registered office address, you should include the additional address when filing the change to the registered office address.
Moving the registered office within the province or territory indicated in the articles
To file a change of registered office address for moving within the province or territory indicated in your articles, you can do so online.
You will need your corporate name and, if you file online, your corporation key . You will also need the form signed by an individual who has relevant knowledge of the corporation and who is authorized by the directors, such as:
- a director of the corporation
- an authorized officer of the corporation
- an authorized agent.
Moving the registered office into another province or territory other than the one indicated in the articles
If you move your registered office to a province or territory other than the one indicated in the articles, you are responsible for amending your articles. To do this, you must file articles of amendment. Fees may apply (see Services, fees and processing times).
Filing changes regarding directors
You must notify Corporations Canada of any change in the board of directors within 15 days of the following actions:
- new directors are elected, or
- individuals cease to be directors.
You must also notify Corporations Canada of any change of address of a director within 15 days of being informed of the change. Note that directors must notify the corporation of a change in their address within 15 days.
Directors can provide either a residential address or an address for service. An address for service is an address where legal documents must be accepted by the director or someone on their behalf, and where an acknowledgement or delivery receipt can be provided, if required. An address for service can be the residential address of the director or a business address.
The directors of your corporation have the power and the duty to manage the business, and affairs of the corporation. As a result, interested stakeholders have a right to know who the current directors are and where they can be reached.
The names and addresses of the directors of a corporation, even if the address of a director is also a residential address, are corporate information that is public (see Public disclosure of corporate information).
Document to file changes regarding directors
To file changes regarding directors, you will need to view/change director information.
Changing the number of directors indicated in your articles
If the number of directors changes from the number indicated in your corporation's articles, you must indicate these changes by amending your articles. You must still change director information (see View/Change Director Information).
At least 25% of the directors must be resident Canadians.