This section highlights the procedure and steps involved in setting-up a corporation. A lawyer or legal advisor, and often an accountant or financial advisor are involved in the formation of a corporation. The following procedures are meant as a guideline and not a substitute for professional advice.
Select the corporate name and obtain a NUANS search through a lawyer or a corporate name search business.
Prepare Articles of Incorporation.
Register the Articles of Incorporation and pay the applicable incorporation fee.
Who will be the directors, officers of the corporation?
Control of the Corporation
Who are the shareholders?
The shareholders which control the majority of the shares in the corporation control the corporation.
Officer, Directors and Shareholders
The shareholders appoint the directors to control the corporation on their behalf.
The officers run the day to day operations of the corporation.
The directors provide the officers with direction.
Depending on the situation, the Articles of Incorporation, Corporate Bylaws, Shareholders Agreement, Director Resolutions or a general policy and procedure guidelines may define the roles of the officers of the corporation.
Where there is more than one shareholder in a corporation, it is strongly recommended that the shareholders enter into a Shareholders Agreement to provide for items as follows:
- Who may own shares in the corporation? How may shares in the corporation be disposed of or purchased?
- Who appoints the Board of Directors?
- Who appoints the officers?
- Who appoints the auditors or accountants for the corporation?
- How is the corporation to be managed?
- How are disputes to be resolved? Is there a means for decision making?
- How is the Shareholder Agreement to be enforced? How is the Shareholders Agreement to be amended?
- What will happen in case of death of one of the partners?
- Which financial institution will serve as the company’s bank?
- What will happen if one or more of the partners wish to leave the corporation?
Corporation Capital Structure
From whom and from where does the corporation obtain the capital necessary to commence business?
If there is more than one shareholder, do each of the shareholders contribute cash? Or do they contribute cash and property? Or cash, property and services?
The corporation can also borrow money from its shareholders or from other lenders.
Click on Worksheet 3.2 to complete the steps necessary to form a corporation (provided you have chosen this form of business organization).