INCORPORATION

Philipp Park - Partner, Commercial Law, Montréal Office

The first step to establishing operations in Greater Montréal is incorporation, which means setting up a legal structure in Canada. Regardless of the option chosen, this process is straightforward and quick.

Option 1 – Corporation – Most foreign entities will carry on business in Quebec through a corporation with share capital. In Canada, both levels of government allow for the creation of a corporation under their respective laws which include the articles of incorporation. These documents represent the founding act and the Charter of the new corporation! They include its corporate name, head office location, number of directors, nominal value of the shares, share capital description and, if appropriate, the limitations on its activities. In Canada, a corporation is not precluded from doing business outside the province of incorporation. What about shareholder liability? It is limited. Shareholders are not responsible for the liabilities of the corporation nor are they considered to own any of its assets.

Option 2 – Non-resident corporation – It may carry on its business in Quebec through a branch. To do so, the corporation must comply with all applicable laws and regulations in the province, including licensing requirements. Since a branch is not a separate legal entity, any debts and obligations incurred through the Canadian branch are the responsibility of the foreign corporation establishing the branch.