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How do you form a new company in Quebec?
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In this article, we will break down the concept of Incorporation Quebec so you know all there is to know about it!
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What Is Incorporation Quebec
Incorporation Quebec is a term generally used to refer to the process of forming or registering a new corporation in the province of Quebec.
Entrepreneurs and individuals looking to operate a business in Quebec under a corporate entity may form a Quebec corporation to serve the Quebec population and do business in the Quebec territory.
A “corporation” is a separate legal entity allowing a person to operate a business and shield or protect his or her personal assets from business creditors.
Under Quebec laws, a company must be legally formed or registered with the Quebec authorities if it intends to transact business in Quebec.
Typically, there are three main choices available to anyone looking to operate a business in Quebec:
- Sole proprietorship
Each of the above choices offer entrepreneurs different advantages and disadvantages.
Those who choose a “corporation” are typically look for the following:
- Have a separate legal entity for the business
- Take greater commercial risk
- Take advantage of limited liability protection offered to shareholders
- Have the flexibility to issue shares to investors
- Have ability to raise financing through different channels
- Appear more credible to clients, suppliers, and other business stakeholders
The main reason why many consider operating a business under a corporation is to limit their liability and exposure to business creditors.
Quebec Corporation Characteristics
A business corporation has the following characteristics:
- It is a separate legal entity from its shareholders
- It can own assets, enter into contract, and exercise legal rights
- It can borrow money, become indebted, and have legal obligations
- It can have a perpetual existence
- It acts through its directors, officers and representatives
- It’s a legal person that can sue and be sued just like a physical person
How To Incorporate In Quebec
In Quebec, the “Registraire des entreprises” is tasked to handle and manage incorporation of legal entities in the province.
To incorporate a Quebec company, you’ll need to file your company’s constitution documents along with an “Initial Declaration” accessible through the link “Produire des statuts de constitution avec la déclaration initiale”.
Another way to register a company in Quebec is to complete the online application by filing your company’s constitution documents along with the notice establishing the company’s head office and list of administrators accessible through the link “Produire des statuts de constitution avec l’avis établissant l’adresse du siège et la liste des administrateurs”.
Those who already have a registered corporation incorporated in another jurisdiction outside of Quebec can register their foreign entities in Quebec by producing a foreign entity registration application using the following link “Produire la déclaration d’immatriculation d’une personne morale”.
As an additional guide or resource, the Quebec authorities have developed an online service called “Démarrer une entreprise” allowing individuals to read about the different steps you may need to take to incorporate in Quebec.
At the moment of writing this article, the guide is only available in French.
A company in Quebec must have a name and you have the option of getting a “numerical” name or registering a unique name.
A numeric name will look like: XXXX-XXXX Quebec Inc.
You will have four numbers separated by a hyphen, another four numbers, then you’ll have “Québec Inc”.
If you want to name your corporation, you must make sure that no other corporation registered in Quebec has the same or a similar name.
The naming of your corporation must follow the naming rules application to companies in Quebec.
You can perform a corporation search in the Quebec corporate registry system to see if there are other companies with same or similar names.
You can also reserve a corporate name by filing an application to this effect.
To incorporate a company in Quebec, you’ll need to pay the filing fees.
As of the writing of this article, a certificate of constitution will cost $347 for regular processing and $520 for priority processing.
Once your company is formed, you will then need to ensure you keep the company in good standing with the Quebec authorities.
As such, you’ll need to file annual reports to maintain the company’s declared information up-to-date.
Here are the steps you’ll need to follow to incorporate a company in Quebec:
- Step 1: Choose between a numbered company or a named company
- Step 2: Determine your company’s physical address in Quebec (PO Box not accepted)
- Step 3: Identify your company directors and officers
- Step 4: Identify your company shareholders
- Step 5: Indicate how many employees your company has in Quebec
- Step 6: Determine your company’s capital stock structure, restrictions, and limitations
Once you have all the above information, you are ready to register a new company in Quebec.
To incorporate a company, anyone with sufficient knowledge and understanding of the business rules and regulations may be able to do it.
The Quebec company registrar offers an online for allowing for a step-by-step completion of the incorporation application.
Having said that, you may also retain the services of incorporation service companies offering services in Quebec or incorporation lawyers, business lawyers, corporation lawyers, even notaries.
The more complex your business structure, the more you may benefit from the legal advice a qualified attorney may provide.
For more simple incorporation requests, you may choose to pay a service company who handles the incorporation procedure but does not offer legal advance or just do it yourself.
Incorporation Quebec vs Canada
In Canada, you have the option of incorporating a company either federally or provincially.
A federal company will be governed by the Canada Business Corporations Act whereas provincial companies will be governed by the equivalent provincial business statutes.
In Quebec, the Quebec Business Corporations Act is the legislative foundation based on which Quebec corporations are governed.
Although a federal company and a Quebec company are similar in nature, there are differences that should be considered.
In most respects, you can consider both Quebec and Canada corporations to provide limited liability protection to shareholders, allow them to operate a business under a separate legal entity, and have the business income reported directly by the company.
On the other hand, here are some differences:
- Shares issued to shareholders in a Quebec company may be partially paid for whereas the federal law requires that shares be fully paid
- Quebec laws allow companies not to issue share certificates to shareholders whereas you must have them under federal laws
- A federal corporation requires that at least 25% of the board of directors be residents of Canada whereas Quebec corporations do not have such residency restrictions
Quebec Incorporation Takeaways
What does it entail to incorporate a business in Quebec?
Let’s look at a summary of our findings.
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