Corporation is a separate legal entity having an existence separate and apart from the business person that created it. A company can be formed under the Provincial Company Act or the Canada Business Corporations Act. Incorporation that is done provincially, giving a company the right to operate under its corporate name in a particular province. Federal incorporation gives a company the right to operate under its corporate name throughout Canada.
The company’s continuance depends only on the filing of annual returns and annual meetings of shareholders and directors. The Company Act allows a company to be owned by just one person. If more than one person is involved in the business, a Unanimous Shareholder’s Agreement is recommended to establish the operational rules between the shareholders including dispute resolution and share evaluation. It is wise to consult with a lawyer to ensure that the company is set up in a manner that meets your business’ present and future needs.
The extended liability protection is one of the main reasons that businesses choose incorporation. Theoretically, no member of the company can be held personally liable for the debts, obligations, or acts of the company. A shareholder is only liable for the unpaid portion of shares owned.