What Must I Know About the Canadian Business Corporations Act?
The Canadian Business Corporations Act (CBCA) is a federal law that stipulates how businesses should be structured in Canada. The ACT is the clearinghouse for Canadian corporate structures, outlining a corporation’s details, such as its definition, organization, and management. It also defines what qualifies as a Canadian-owned business.
All these factors are crucial as they affect finances and taxes for corporations. If there are details about the Act that you need clarification on, consult skilled business lawyers in Thornhill. They can guide you on the rules for founding a corporation or other businesses in Canada. They can also check if your company is compliant to avoid getting into trouble with authorities.
When Was the CBCA Incorporated?
The Canadian Business Corporations Act was legislated based on a task force report organized in 1967. It provided the first comprehensive review of federal corporate law since 1943. The bill received royal assent in March 1975 but didn’t go into force until 1975.
Almost 284,000 corporations in Canada are incorporated under the Act, comprising approximately 50% of Canada’s most prominent business corporations traded publicly. Since its adoption in 1985, the CBCA has guided the actions of virtually every major player in the Canadian economy.
It was revised in 2019 to include requirements you may want to check with skilled business and corporate law lawyers in Ontario. One of the inclusions is that information about senior managers’ and directors’ diversity must be available to shareholders.
What Are the Objectives of the CBCA?
The CBCA regulates federally incorporated Canadian businesses by providing a framework for corporate governance for SMBs. The Act revises and reforms the law governing business corporations to advance the cause of uniformity of business corporation law. It also:
- Provides a means of allowing an orderly transference of certain federal companies incorporated under various Acts of Parliament to the CBCA
- Sets out the rights and responsibilities of the management, board, shareholders, and financial accountability
- Ensures that investors have confidence in the way corporations are governed
Corporate transparency has been an ongoing concern. If it affects your corporation in one way or another, it would be essential to verify if it meets the conditions outlined in the CBCA. Skilled business and corporate law lawyers in Ontario can help you go through the Act regarding the various sections of your corporation.
What is the Difference Between the CBCA and OBCA?
Entrepreneurs in Canada can incorporate their companies under the provincial law known as the Ontario Business Corporations Act (OBCA) or the federal law CBCA. The CBCA offers three advantages, as explained by Ontario business and corporate law lawyers:
Enhanced Name Protection
Choosing a corporate name is one of the most critical steps in incorporating a company, especially if you intend to expand your business into multiple territories in Canada. When registering it under the Federal Act, you must clear both federal and provincial databases to ensure the name is distinct from other registered companies in the country.
The process goes through a NUANS report that you must attach to the incorporation form. This process is crucial in reducing the chances that provincial or territorial authorities will reject a corporation governed by the CBCA on the basis of having a similar name or creating confusion with an already established corporation.
The CBCA offers excellent flexibility in the choice of business locations for the following:
- Registered office: It can be in any province in Canada as specified in the articles of incorporation, while the OBCA only allows the registered office to be anywhere in Ontario.
- Shareholder’s meetings: These can happen anywhere within Canada as provided by the by-laws or as the directors determine. The OBCA allows meetings to happen subject to the articles and any unanimous shareholder agreement in and outside the province of Ontario, as the directors choose or where the corporation’s registered office is.
- Quorum: A quorum exists under the CBCA even where shareholders or directors are present over a conference call or electronically. Under the OBCA, a quorum exists where the majority holders of voting shares are present or are represented by proxy.
- Record keeping: Record keeping happens at the registered office anywhere within the country as determined by the directors. They may also be outside the country if certain conditions are met. Under OBCA, record keeping happens at the registered office or anywhere in Ontario as the directors determine it right.
Sign of Distinction
When you incorporate your company under the CBCA, you create a mark of distinction for your clients outside Canada. It enables you to start a business with international ambitions based on a global brand of recognition. A corporation established under federal law or OBCA may not provide a similar added value.
However, despite all these advantages provided by the CBCA, a corporation established under federal laws may still have to comply with specific provincial laws. If parts of the OCBA or CBCA are unclear, consult Thornhill business lawyers for clarification and proper legal guidance.
Skilled Legal Counsel From an Experienced Business and Corporate Law Professional
Incorporating a company takes work because you must choose the law you want to govern your company. Many factors come into consideration, such as the business name, operations, and the costs of establishing the business. If you’re not well-versed in business laws, the process can be complicated, but business layers in Ontario can help you.
Our business and corporate law lawyers in Thornhill have a broad range of knowledge and experience in cross-border business incorporation and transactions. We can provide legal counsel and representation in all areas of business and corporate law, whether simple or complex, so that you can focus on growing and nurturing your business. Contact us today to get started.