Incorporating A Company Not So Simple

published by asingh on Thu, 08/01/2013 - 16:44

 

Incorporating a private BC company is not as easy as you might think. Many people think that once they receive their Certificate of Incorporation, their company is ready to operate. 
But choosing and reserving an appropriate company name, deciding on an authorized share structure, settling on the Articles (rules and regulations that govern the conduct of your company), completing the Incorporation Agreement, and filing the Incorporation Application (with attached Notice of Articles) through Corporate Online, are only the first steps. After you get your Certificate of Incorporation, you still have many things to do to complete the organization of your company.
You can have an actual organizational meeting, but the business can just as easily be done through consent resolutions signed by all directors. 
Shares have to be issued to the incorporators/shareholders. When first issuing shares, it’s the proportion each shareholder receives that’s important, not the number. If there are two shareholders and they are to “own” the company equally, then they should each be issued the same number (it could be ten shares each or 5,000 each). 
Then there’s the appointment of officers. While a company doesn’t have to have any particular officers such as a president and a secretary (unless your Articles say otherwise), it’s traditional to appoint officers to handle the day-to-day operations. If you have a one-person company, you can be both president and secretary.
You may also want to appoint a banker and authorize the transfer of assets or money into the company.
The Business Corporations Act requires that minutes of all company meetings must be prepared and kept at the records office, along with other company records. You therefore need a company records book or minute book where you file the minutes of your company meetings, including your first organizational meeting. If the business that would have been conducted in a meeting is done instead by consent resolutions, then those written directors’ resolutions have to be signed and filed in the records book.
You also need to prepare a directors’ register showing the full names and “prescribed addresses” of the directors (for the delivery of notices and legal documents, and getting mail) and other specified information. For the prescribed delivery address, directors can choose their home or the office they normally occupy during business hours.
As well, a central securities register must be prepared. It shows the shares issued by the company, the full names and addresses of shareholders, the number of shares they own, the class and any series of those shares, and so on.
Does your company need financing to begin operating? The easiest way to raise money is by shareholder loan. This should be documented by having the company make a promissory note, which should be approved in either a directors’ resolution or in the minutes of a directors’ meeting.
If there’s more than one shareholder, consider a shareholders’ agreement with “buy-sell” provisions, so existing shareholders keep control of the company if a shareholder dies or wants out.
Once your company is organized, certain things must still be done to maintain your company, for example, filing annual reports with the Corporate Registry.
Your lawyer can assist you with all of this. If it’s a problem keeping your own records, consider using the “records office” services offered by your lawyer for an annual fee.
 
This column has been written with the assistance of ANDREW LAU. The column provides information only and must not be relied on for legal advice. Please contact ANDREW LAU at (604) 681-3833 for legal advice concerning your particular case.
 
Lawyer Janice Mucalov, author of this article, writes about legal affairs for several publications. “You and the Law” is a registered trade-mark. © Janice Mucalov.
 
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