FAQ

This is to be understood first! A company is a legal entity used to operate a business. It must have a name, at least one director, one shareholder and a head office. A company is easily recognized by its ending (inc., ltd, ltée). The company differs from other groups as it is a legal person.

"Business Corporation" is the exact term to define a company. In common language, the two terms are synonyms.

A legal person is an entity that has the same rights and duties as an individual (natural person), with some exceptions. Every person being able to sue and be sued, a legal person has these same rights. A company is a legal person.

Incorporation consists in creating an entity that has a separate legal personality, namely the business corporation (company). Any person able to be director can decide to incorporate his business.

A business, or enterprise, is defined as an “organized economic activity”. In Québec, a profit business can be operated under three forms: sole proprietorships, partnerships and companies (business corporations).

A sole proprietorship is an enterprise operated by only one person. It is not a legal person, so the business and the individual are one. Then, in fact, the individual bears all risks related to direction of the business. As for the company, it is independent from its leaders, and vice versa. Thereby, it is possible to sue a company, but one can only sue the leader of a sole proprietorship.

Both are groups allowing one to operate a business. A partnership is an organization of two or more people called “partners”. Each partner is a part owner of the partnership and responsible for actions taken by other partners. Risks related to direction of a partnership rest on the partners’ shoulders. As for the company, it may be operated alone and has a separate legal personality from its founders. Unlike companies, partnerships are not legal persons.

There are many advantages to incorporation. An important advantage is the effect on personal responsibility. In fact, responsibility of actions taken by a company does not rest directly on its founders and leaders, because the company is independent from them. Another advantage shows when bankruptcy occurs, because personal bankruptcy has no direct effect on the company. Also, a company shows more professional image than a sole proprietorship or a partnership, which only require registration. That is not to mention financial and tax advantages.

Both laws are similar. In general, the provincial law meets all requirements for a self-employed or a SME.

A corporate name is an official name for the company, one that must appear on all legal documents. However, the company can choose other business names which may be used in the normal course of its activities.

A corporate name makes the official name more significant. However, it generates higher costs due to the name search. Also, because the name does not have a particular meaning, it is easier for a numbered corporation to change its activities, unless restrictions were planned for the business activities.

Of course it is! You will then be the only director and shareholder of your company!

A share capital is the set of shares of the company. It is composed of many classes of shares, all decided by the founder. Be sure to check our page Share capital for more details.

The Minute Book is a document including all information on the corporation, especially the certificate of constitution, by-laws, resolutions, ledgers and share certificates. That is why it is important to keep it orderly and to update it frequently.

There is no difference. The numerical book is accessible anytime while the Deluxe book is a material one. The material book can either be received by mail or taken at Paraco’s office. Information contained in both books is the same.

A director is a member of the board of directors and takes part in important decisions related to management of the corporation. An officer is a person with important functions in the company (like the president, vice president, treasurer or secretary).

No! It is possible to provide restrictions to share issuing. Such company is called a "private issuer": its shares are only accessible to its officers, directors, founders, employees and their immediate surroundings. In fact, a majority of companies in Québec are private issuers. Furthermore, any share issuance must be approved by the board of directors of the company.

Of course you can! A company incorporated in Québec can perform its activities anywhere in the world. The origin of the incorporation does not matter. On the other side, any company, whatever the origin of its incorporation, must register in Québec if it wants to perform its activities here. Section 25 of the Act respecting the legal publicity of enterprises states that: “[…] a person or partnership who has an address in Québec or, either directly or through a representative acting under a general mandate, has an establishment, a post office box or the use of a telephone line in Québec or performs any act for profit in Québec is presumed to be carrying on an activity or operating an enterprise in Québec.”

The bankruptcy of a company has no effect on its directors and officers. A director or an officer does not have to refund from his own pocket the debts of the company. On the other side, personal bankruptcy of a director will force him to leave his functions within the company, as it is forbidden for a bankrupt person to be a director of a company.

A shelf company is a company that has been incorporated but never used. In some cases and under some restrictions, this kind of company can be used for specific purposes.