Provincial vs. Federal

There is greater name protection, increased global recognition of a federal charter, and a lower government incorporation fee.

Easier to find an available name, faster incorporation turn-around time, and no need to file an annual return each year.

These two pieces of legislation are almost identical, with very few minor variances. This is because the Ontario Business Corporations Act (OBCA) was modeled after the Canada Business Corporations Act (CBCA) CBCA to create uniformity across corporate law in Canada and its provinces. That being said, there are minor variances between incorporating federally versus provincially, in terms of geographical scope of operations, name selection, turn-around time, cost and convenience.

There is no difference in the jurisdictional scope of a federal or provincial corporation, contrary to what many believe. In both instances, the federal or provincial corporation must obtain an extra-provincial registration to do business in any particular province. In other words, a federal corporation does not have the prima facie jurisdiction to operate across Canada; it must obtain an individual license in each province it wishes to carry out a commercial activity. The single advantage of a federal corporation is that it secures the corporate name reservation across Canada whereas a provincial corporation will provide you with name protection in that province only.

Both Ontario and federal statutes require that annual director and shareholder meetings are mandatory and that at least 25% of the directors reside in Canada. Under the Ontario Business Corporations Act, quorum exists where the holders of a majority of the voting shares are present or represented by proxy. The CBCA, by contrast, provides more flexibility by recognizing quorum even where shareholders or directors are present electronically or over conference call. This is useful for founders where the directors and shareholders of the company are not in the same city.

That depends on whether you are incorporating provincially or federally. When incorporating under the Ontario Business Corporations Act, the name selection is self-policing; that is, the name chosen by the person seeking to incorporate simply needs to be available under Ontario laws. Seeking a name under the Canada Business Corporations Act Name is decided by government examiners based on availability across Canada.

Because the name selection under the Canada Business Corporations Act is decided by government examiners based on availability across Canada, turn-around time is usually longer than selecting a name under the Ontario Business Corporations Act. Because government examiners are integral to selecting the name, this offers enhanced name protection.

Incorporating under the Ontario Business Corporations Act costs $350 versus $200 under the Canadian Business Corporations Act. While incorporating under the CBCA is cheaper upfront, one should note that a federal corporation must pay an annual return of $12 each year for its entire existence, whereas a provincial corporation does not pay any fee for annual filings.

That depends on whether you are filing provincially or federally. The advantage of incorporating under the Ontario Business Corporations Act is that it combines both the tax and the annual filing requirement into one form. This means that corporations are responsible for just one filing per year. In addition to simplicity, this bundled process reduces legal and accounting fees. The Canadian Business Corporations act requires founders to file two returns: one annual corporate return and one tax return each year at a cost $12 in the former and as high as $1500-$3000 in accounting fees for the latter. Further, one should note that federally-incorporated businesses carrying on a business in Ontario need to comply with the filing requirements of the Corporations Information Act and the Business Names Act in Ontario.