doing business in canada - Davies Ward Phillips & Vineberg LLP

provincial law cannot do so as of right in another province. Hence, an OBCA, QCA or QBCA corporation cannotbe licensed or registered under its name in another province if a confusingly similar name is already being usedthere by another corporation. If this is a concern, incorporation under the CBCA may be advantageous, althoughas a practical matter a CBCA corporation may need to operate under a different name in any province where itscorporate name would be confusing. However, it may be easier to obtain a desired corporate name byincorporating provincially. Under the OBCA, QCA and QBCA (unlike the CBCA), proposed corporate names arenot subject to pre-clearance for possible confusion with existing names. Incorporators can decide for themselveswhether there is any risk of other parties objecting to the names they wish to use.Both federally and provincially incorporated corporations must satisfy the registration requirements of everyprovince in which they intend to carry on business. Provincial corporations must also obtain extra-provinciallicences to carry on business in most other provinces, but Ontario and Québec have only a registrationrequirement. In most provinces, corporations must file corporate returns annually to keep their registrations upto date.Generally, only public corporations, whether federally or provincially incorporated, must file financial statementson the public record.The CBCA and OBCA require at least 25% of the directors to be Canadian residents, unless a corporation hasless than four directors, in which case it needs to have at least one Canadian resident. The QCA and the QBCAdo not require that any directors be Canadian residents. All of the CBCA, OBCA , QCA and QBCA require,however, that a public corporation have at least three directors, and the CBCA, OBCA and QBCA require that acertain number of such directors be independent. Additional corporate governance requirements are imposedby securities regulators on public corporations: see the Corporate Governance section of this guide.There are a few other important differences between a CBCA or OBCA corporation and a Québec corporation.The QCA and QBCA authorize the creation of shares with or without par value and provide for the issuance ofshares which are not fully paid up, whereas the CBCA and OBCA prohibit par value shares and the issuance ofshares which are not fully paid up. The CBCA, OBCA and QBCA have stricter rules with respect to financialdisclosure than the QCA and also grant greater rights and remedies to minority and dissident shareholders thanthe QCA. However, the QCA also has some limitations, since it does not provide (unlike the other statutes) fordirectors and shareholders to participate and to vote at meetings by electronic means (this will be remedied bythe QBCA, which will permit electronic meetings and voting).The corporate statutes of most other provinces in Canada are generally similar to the CBCA, the OBCA and theQBCA. However, there are differences in detail that may provide additional flexibility to certain investors. Forexample, certain provinces (including Québec) do not require that any directors be resident Canadians, or maypermit a corporation to hold its own shares, whether directly or through a subsidiary (which is prohibited underthe CBCA and OBCA).OFFICERS AND DIRECTORSThe daily operations of a corporation are normally carried out by its officers. Officers can be non-residents ofCanada, provided they have complied with Canada’s immigration laws (see the Temporary Entry and PermanentResidence section of this guide).Directors and officers must act honestly and in good faith with a view to the best interests of the corporation.They must also exercise the care, diligence and skill that a reasonably prudent person would exercise incomparable circumstances.Directors and officers may incur personal liability if they cause the corporation to contravene applicable laws.Directors also may be liable under statutes such as the Employment Standards Act, 2000 in Ontario, An Actrespecting labour standards in Québec and the federal Income Tax Act for employees’ unpaid wages andamounts that should have been remitted to taxation authorities, if the corporation becomes bankrupt.Types of Business Organization 19