Ontario Standard Corporation
Standard corporations offers limited liability to its shareholders, making it suitable for businesses that seek to grow, raise capital, and limit the personal liability of their owners.
Alberta Standard Corporation
An Alberta Standard corporation gives you the ability to conduct your business in Alberta. The Alberta government has set rules that are unique from other provinces when registering your business.
Federal Corporation
A Federal corporation is similar to a provincial corporation but under the jurisdiction of the Federal government. Federal Corporations have more flexibitlity when conducting business across boarders.
What is a Standard Corporation?
A standard corporation in Canada is a legal entity separate from its owners (shareholders). It provides limited liability, which means that shareholders are not personally responsible for the corporation’s debts. In Canada, corporations can be created under federal or provincial/territorial laws, depending on where the business intends to operate. Here are key features of a standard corporation in Canada:
1. Separate Legal Entity
- A corporation is a separate entity from its owners and can own property, enter contracts, sue or be sued, and take on liabilities in its own name.
2. Limited Liability
- Shareholders are only liable to the extent of their investment in the corporation and are not personally responsible for the company’s debts or obligations.
3. Taxation
- Corporations are taxed at both the federal and provincial levels, depending on where they operate. In Canada, corporations generally pay corporate income tax on their profits, and dividends are taxed separately in the hands of the shareholders. This leads to “double taxation” (once at the corporate level and again at the individual level).
4. Ownership
- Corporations can issue shares, and ownership is divided among shareholders based on the number of shares they hold. There is no limit to the number of shareholders in a corporation.
5. Governance
- Corporations must have a board of directors, who are responsible for overseeing the management and direction of the company. Directors are elected by shareholders.
6. Reporting and Compliance
- Corporations are subject to more rigorous reporting requirements than other business structures, such as annual financial statements, meetings, and corporate filings with the respective federal or provincial government.
7. Lifespan
- A corporation can have a perpetual existence, meaning it can continue indefinitely beyond the involvement of its founders or shareholders.
Types of Corporations in Canada:
- Federal Corporation: Incorporated under the Canada Business Corporations Act (CBCA). It allows the business to operate across all provinces and territories with the same legal rights.
- Provincial Corporation: Incorporated under the laws of a particular province (e.g., Ontario Business Corporations Act). This allows the business to operate primarily in that province.
This structure is suitable for businesses aiming for growth, seeking investors, or managing risk through limited liability.