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CORPORATE NAMING UNINTERRUPTED: Federal vs. Provincial

Introduction

Even after submission of an application for incorporation to the peoples concerned, doubts remain, a feeling of something left unfinished prevails, and a good night’s sleep becomes difficult. To set such things at rest, it is preferable to look at the matter afresh so as to remove the niggling concerns before the last action.

Is it okay to use an individual’s name in the corporate name?

As personal names are sufficiently distinctive, they can be used in naming the company. However, the personal name alone cannot be used as the name of the company. “Marion Solas” is not acceptable as a company’s name, but ”Marion Solas  Beauty Products Incorporated” is. No authorisation is necessary if  the person named is signing the incorporating documents or if she will be a director of the new company. If it is not so, then the named person’s consent will have to be provided.

Pre-approval

There is a provision for pre-approval of the proposed company name. It is particularly important because if Corporations Canada rejects the proposed company name, then the entire application will be rejected. To avoid such a situation, a pre-approved name is of immense help. Moreover, this service is provided free of charge. It is necessary to emphasize again that the application for pre-approval or for incorporation should be as complete as possible. If the company’s first application is rejected, there is indeed a provision to reapply with additional information later. However, it is easier, and less expensive, to include all the relevant information at the outset. Such relevant information should contain among others descriptions of the company’s products or services, the prospective customers and where the company intends to carry on its business.

Yet another thing to keep in mind is that the pre-approved name does not guarantee protection against names or trade-marks existing at the time the name is approved. Admitted that the NUANS search report is usually very reliable, but the blessed system is not exactly foolproof. It is the responsibility of the company and the company only to ensure that the business name does not infringe on the rights of others. Likewise, it is also for the company to be vigilant and to make sure that no new business names or registered trade-marks infringe on the company’s inalienable rights. It is not uncommon for people with an existing business (not incorporated) to wonder if they can continue to use the existing name when they apply for federal incorporation. Actually, the federal corporate name requirements are a must for all corporate name applicants. However, this does not prevent them from carrying on business using the existing name in the province where the name is registered. Anyway, they must register (often called an extra-provincial registration) with the province(s) in which they intend to operate. Currently, Corporations Canada has a partnership with the provinces of Ontario, Newfoundland and Labrador, and Nova Scotia to reduce the manual entry of information and to speed up such extra-provincial registration during the federal incorporation process.

Nature of Business

It is also natural for people to enquire what kind of businesses can be incorporated under the Canada Business Corporation Act (“CBCA”)?  The fact is almost any type of business can be incorporated under the CBCA. The exceptions are mortgage, banking, insurance, loan and trust companies, and other Financial Institutions. Such entities along with cooperatives, condominiums, Chambers of Commerce and not-for-profit organizations are incorporated under different statutes. There are no restrictions, such as minimum company size, on the businesses which can be  incorporated under the CBCA. While all provinces and territories have similar legislation for companies operating within their borders, only the CBCA is national in scope.

It is a fact that many small businesses incorporated under the CBCA have the intention (either now or sometime in the future) of operating in more than one province. Such business people chose to incorporate under the CBCA now so as to simplify their business relations later if they decide to expand operations or grow larger.

Provinces other than the four listed above and territories have individual requirements for registering corporations from outside their borders. Incorporators (definition below) should contact the local corporate law administration office (also known as Provincial Registrars) in each province or territory in which they plan to carry on business

May I form a corporation?

A single person or a group, who are 18 years of age or older, are mentally sound and who are not bankrupt may form a corporation under the CBCA.

Likewise, one or more companies or “bodies corporate” may incorporate a company.

Such persons are called incorporators. Under corporate law the word “person” is defined as individuals or corporations. An incorporator (individual or corporation) can form a corporation whose shareholders, officers and directors are other persons. Shareholders and incorporators can be other corporations or individuals.  However, officers and directors must be individuals only.  The incorporator has the option to serve as the sole director, officer and shareholder of the company. He also carries the responsibility to devise the organizational procedures, such as filing the articles of incorporation, designating the first directors and so on.

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