Articles of incorporation refer to legal documents that must be filed with the provincial or federal government to form a new corporation.
In this article, I will break down the notion of Articles of Incorporation so you know all there is to know about it!
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What Are Articles of Incorporation
Articles of incorporation refer to legal documents that must be filed with the provincial or federal authorities to form a new corporation.
In other words, if you want to operate a business under a corporation, you must prepare and file the corporation’s articles of incorporation to have the government officially create the business entity.
There are many advantages to running a business as a corporation.
The main reason why many entrepreneurs and business owners operate their business as a corporation is to benefit from limited personal liability.
Since corporations are separate legal entities from their shareholders, the company owners are shielded from business debt and liability.
Why File Articles of Incorporation
There are many reasons why business owners and entrepreneurs will file articles of incorporation to form a new corporate entity.
The primary reason for that is that a corporation is a separate legal entity and is distinct from its shareholders.
As such, a company can own assets or incur liability without impacting the shareholder’s personal credit or assets.
Also, corporations have the right to conduct business in a similar way as an individual could.
For instance, a corporation can sign its own contracts, can exercise legal rights, can borrow money, can sue, and even be sued.
Many consider filing articles of incorporation for the purpose of creating a corporate entity allowing them to operate a business in such a way as to limit their personal liability.
Companies also have lower tax rates that may be interesting for those who do not mind keeping the business revenues in the corporation.
There are other benefits of owning a corporation as well, such as it offers a more flexible ownership structure, is a better structure for business financing, can exists perpetually, and offers more credibility to the business owners.
Creating Articles of Incorporation
Every jurisdiction will have its own requirements for creating articles of incorporation when forming a new corporate entity.
In the Province of Quebec, you can create a new corporate entity by filing an electronic request through the Quebec corporate registry (Registraire des Entreprises du Quebec).
There are two ways for creating a corporation in Quebec, by filing an initial declaration along with the articles of constitution, or by filing the articles of constitution along with the notice setting the headquarters and listing the administrators.
For a corporate entity to be formed, it must file its articles of incorporation and pay the necessary filing fees to the government.
For a federal corporation, the articles of incorporation must be filed with the federal government.
The process can also be done online and will be somewhat similar to the Quebec process but the nature of the information requested by the federal government will be slightly different.
After Filing Articles of Incorporation
Once the articles of incorporation are filed and approved by the government, you will receive a certificate of incorporation.
The certificate of incorporation is evidence that your corporate entity has been legally formed and it will provide the date on which the government validly recognizes the entity.
To complete a company’s incorporation process, following the receipt of the company’s certificate of incorporation, an organizational meeting should be held where the corporate entity adopts various resolutions, names its directors and shareholders, issues share certificates, and adopts its by-laws.
A corporation will ultimately be governed by the laws under which it was incorporated, its articles of incorporation, by-laws, and any shareholder agreements put in place by its shareholders.
Federal vs Provincial Articles of Incorporation
In Canada, you have the option of filing articles of incorporation for either a federal company or a provincial company.
A federal company is a company that is incorporated under the Canada Business Corporation Act.
On the other hand, a provincial corporation is a corporate entity that was incorporated under provincial laws.
In Quebec, the applicable provincial law is the Business Corporations Act of Quebec.
Depending on your business needs, you will have to choose between filing federal articles of incorporation or a provincial one.
For example, a federal corporation can do business in all provinces and territories in Canada but must register itself with the Quebec government if it is looking to transact business in Quebec.
On the other hand, a Quebec corporation is automatically registered in Quebec, and should it want to do business in other provinces, it must potentially file additional paperwork and pay additional fees.
Another distinction between federal and Quebec articles of incorporation is that a federal corporation must have at least 25% of its board members be Canadian residents whereas Quebec corporations do not have such a restriction.
So there you have it folks!
What are articles of incorporation in Quebec?
In a nutshell, articles of incorporation in Quebec refer to the legal documents that are filed when forming a new corporate entity.
The articles of incorporation can be filed with the REQ Quebec to form a new provincial corporate entity or with the federal government for a Canadian corporate entity.
Every Canadian province has its own domestic laws governing how corporations are formed along with the requirements for the filing of the corporate entity’s articles of incorporation.
Some are able to draft their own articles of incorporation and form their own corporations.
However, others may want legal support and guidance during the process.
If that is the case, be sure to work with an incorporation lawyer who can provide you with the right advice considering the nature of the business you’re looking to operate.
AK-Law is a boutique law firm having a core focus on all facets of the business. We support businesses of all sizes in their day-to-day as well as strategic legal needs. If you want to know more about our firm, better understand what we do, or get a quote, be sure to reach out!
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