Open a Public Corporation in Canada

Updated on Thursday 28th March 2019

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Local and foreign investors who want to open companies in Canada have several choices in terms of business forms. Even if the most employed one is the corporation, there are two types of corporations which can be established in Canada. The first one is the private company which is subject to less stringent requirements and the second one is the public corporation which is subject to more complex requisites.

The Canadian public corporation is governed by the Company Law, but also by specific regulations applied at provincial levels. Our company formation agents in Canada can explain the requirements related to opening a public corporation and can also help those interested in setting up this type of structure.
 

Characteristics of public corporations in Canada


The name of this business form is related to the fact that it can trade its shares to the public. The Canadian public company can offer its shares for sale on the Stock Exchange. Not all the shares must be listed, as this type of company can issue several classes of shares, out of which only one needs to be traded in order for the company to become public.

A Canadian company can also become a public corporation if at the end of the financial year it respects the provisions of Regulation No. 4800 within the Income Tax Act.

Canadian subsidiaries can also be or become public corporations if they are established or controlled by other public companies.

You can ask our company registration consultants in Canada about the conditions related to opening a public corporation.
 

The shareholders of a public corporation in Canada


The Company Law provides for the same conditions for opening a private and public corporation in Canada, including in the shareholding structure of the business. This means that the public company only requires a shareholder as a founder of the business.

The public company, however, can also admit other shareholders through the sale of shares or listing the shares on the Stock Exchange. There is no maximum number when it comes to the shareholders of a public corporation in Canada.

Our company registration agents in Canada can offer more information on the rights and obligations of public corporations.
 

The share capital of a Canadian public corporation


One of the most important advantages of opening a public company in Canada is that there is no minimum amount of money required as a share capital for the corporation. However, the company will need to have a stated share capital which needs to be mentioned in the company’s statutory documents and a paid-up capital which will be the amount of money deposited by the founders in the company’s bank account.

The share capital can be altered, meaning that it can be increased or decreased.

Our local representatives can offer more information on the share capital requirements of a public corporation in Canada. We can also assist with the opening of a corporate bank account.
 

How to register a public corporation in Canada


The incorporation of a public corporation in Canada is subject to the same requirements as a private company and implies the following steps:
 
  •           drafting the company’s Articles of Association which must state the type of business form;
  •           opening a corporate bank account in which the share capital must be deposited;
  •           obtain a federal business number or reserve a trade name for the public company;
  •           register the company with the federal office or the provincial office of the Trade Register;
  •           obtain permits or licenses, depending on the activities or industry the company will operate in.

It must be noted that a private company can also be turned into a public company in Canada. This is possible through an initial public offering. If you plan on setting up a business in Canada and need guidance for the establishment of a public corporation, you can rely on our local advisors.
 

Why open a public corporation in Canada?


The public corporation is quite popular in Canada because of the advantages it offers. Among these are:
 
  1.           it can be used for various purposes, among which initial public offering on one of the largest stock markets in the world;
  2.           the public corporation can be entirely owned by foreign natural persons or companies;
  3.           the founder(s) can decide on the paid-up share capital of the business, in accordance with their needs;
  4.           the public corporation can be registered at the federal level, but also can be registered at a provincial level at the same time;
  5.           it can be used as a subsidiary company by foreign companies interested in placing their activities in Canada.

If you are interested in setting up a public corporation in Canada, please contact us for personalized company formation services.