Canada is a federal state with ten provinces and three territories. Canada is dominated by the common law system, except for the province of Quebec. Canadian provinces have their laws governing all industries, except those administered by the Federation. Registering a company in Canada and opening a bank account with a local bank is one of the best options for dealing with the dollar at the moment.
Basic organizational and legal forms of companies in Canada
It is worth noting one of the important features of Canadian corporate law, namely, the organizational and legal forms of legal entities, on the choice of which the specifics of both the company registration procedure and business conduct depend. Also, the division of Canada into provinces leads to the fact that certain organizational and legal forms may not be available in a particular province. The registration of a company in Canada is carried out in the following main organizational and legal forms:
Corporation
In Canada, corporations created to make a profit are of several types:
Canadian-controlled private corporation (CCPC)
The main feature of this type is that this corporation is controlled by residents of Canada and cannot be established 100% by non-residents or public companies. This is a private company with a limited number of members who must be residents of Canada. If, for example, some shareholders became non-residents (or shares were sold to non-residents), as a result of which the non-residents receive more than 50% of the voting rights in the company, the corporation will no longer qualify as a CCPC.
A private corporation with characteristics different from the characteristics of the first type of corporation (Other Private Corporation)
Also formed mainly by residents; public companies are not allowed in the company structure.
Public corporation
Free circulation of corporation shares on the stock exchange is allowed.
Extra-provincial Corporation (EPC)
In some provinces of Canada (Ontario, Quebec, and some others), the possibility of registering an Extra-Provincial Corporation (hereinafter referred to as EPC) is available.
EPCs are exempt from tax on income earned outside Canada. Moreover, there are no requirements for the residency of directors and shareholders. These features together make
EPC is a very profitable option when choosing a form of business registration in Canada.
This form of doing business is in great demand among non-residents in Canada. As a rule, it is used to expand a business already operating in another jurisdiction.
Partnership
Also a very common form of doing business in Canada.
There are three types of partnerships:
Full partnership (General Partnership)
In a full partnership, each partner is fully personally liable for debts, contractual obligations, and delinquencies arising from the activities of the partnership, just as in the case of a sole proprietorship.
Limited partnership (Limited Partnership or LP)
It is a partnership made up of one or more general partners who have unlimited liability and one or more limited partners, depending on their contribution to the partnership.
The limited partner contributes to the partnership, and may advise from time to time, but does not participate in the actual running of the business. If such a partner is engaged in active business management, he will lose limited liability.
Limited Liability Partnership (LLP).
A limited partnership, as the name suggests, provides a more substantial level of limitation of liability for partners. If, for example, a partnership is sued, only the assets of the partner who interacted with the plaintiff are at risk. The property of other partners will be protected, which does not happen in a full partnership.
In most provinces, LLPs are only permitted in high-risk professional environments such as lawyers, accountants, architects, or doctors.
LLPs are available in all provinces of Canada. However, since LLPs are governed by provincial law, the protection granted differs from province to province.
LLP is also convenient for achieving various goals – trading operations, buying and selling goods in Europe and their further implementation around the world; for services provided remotely, accepting payments around the world, online trading, and much more.
Sole proprietorship
All risks and responsibilities rest with an individual who is registered as an individual entrepreneur.
