300 plain-language Q&As about Ontario corporate. Browse below, or search the whole library.
Amalgamation is a process under the Business Corporations Act (Ontario) by which two or more Ontario corporations combine into a single continuing…
Read the full answer →An amalgamation is a statutory process under Ontario's Business Corporations Act (or the Canada Business Corporations Act for federal companies) in…
Read the full answer →A shareholder agreement is a contract, and like any contract it can be amended by the agreement of the parties to it. Most shareholder agreements…
Read the full answer →Both are fundamental documents, but they serve different purposes and live in different places. Articles of incorporation are filed with the government…
Read the full answer →When you buy a business in Ontario, you typically do it through either an asset purchase or a share purchase, and the choice affects what you acquire,…
Read the full answer →Most commercial leases in Ontario contain provisions governing assignment — the transfer of the tenant's interest in the lease to a new tenant.…
Read the full answer →Authorized shares are the maximum number (or, in Ontario, an unlimited number if the articles so state) of shares that a corporation is permitted to…
Read the full answer →In Ontario, you only need to register a business name under the Business Names Act if you trade under a name that is different from your own legal…
Read the full answer →Ontario entrepreneurs can choose from several structures, each with different liability, tax, and governance characteristics. A sole proprietorship is…
Read the full answer →A shotgun clause (formally a mandatory buy-sell provision) is a mechanism in a shareholder agreement for resolving deadlock between co-shareholders who…
Read the full answer →Yes. In Ontario, the same individual can serve simultaneously as a director and an officer — for example, as a director and the president or secretary…
Read the full answer →Under the Ontario Business Corporations Act, at least 25% of the directors of an Ontario corporation must be resident Canadians. If a corporation has…
Read the full answer →Yes. A corporation incorporated in a foreign country (outside of Canada) can carry on business in Ontario, but it must register as an extra-provincial…
Read the full answer →Ontario courts distinguish between two types of clauses that set a fixed sum for breach of contract: liquidated damages clauses and penalty clauses. A…
Read the full answer →Yes, you can incorporate an Ontario corporation yourself through the Ontario Business Registry without a lawyer. The process is available online, and…
Read the full answer →Yes. Ontario environmental legislation, including the Environmental Protection Act, can impose personal liability on directors and officers of…
Read the full answer →Yes, an Ontario corporation can carry on business in other Canadian provinces, but it may need to register as an extra-provincial corporation in each…
Read the full answer →Generally, no — not directly. The Ontario Business Corporations Act vests the authority to manage or supervise the management of the business and…
Read the full answer →Yes. The Ontario Business Corporations Act gives shareholders the right to remove a director before the end of their term by passing an ordinary…
Read the full answer →Yes, the Canada Business Corporations Act (CBCA) and the Ontario Business Corporations Act (OBCA) are similar in many ways but differ on several…
Read the full answer →Closing conditions in an Ontario business purchase agreement are requirements that must be satisfied before the parties are obligated to complete the…
Read the full answer →In Ontario, an employer cannot make fundamental changes to an employee's job terms without consent. If they do — and the change is significant enough —…
Read the full answer →A constructive trust is an equitable remedy that courts impose to prevent unjust enrichment. When an Ontario director breaches their fiduciary duty and…
Read the full answer →Yes. The process of moving a corporation from one incorporating jurisdiction to another is called "continuance." An Ontario corporation can continue…
Read the full answer →When a commercial contract contains ambiguous language, Ontario courts follow established principles of contract interpretation to determine what the…
Read the full answer →In Ontario, you can generally terminate a business contract for cause when the other party commits a material breach — one that goes to the root of the…
Read the full answer →Changing an Ontario corporation's legal name requires amending the articles of incorporation through the Ontario Business Registry. This is called…
Read the full answer →Yes — and it is one of the most important steps to take immediately after incorporating. A corporation is a separate legal entity, and that separation…
Read the full answer →Yes. Unlike individuals (who always have a December 31 tax year), a corporation can choose any month-end as its fiscal year end when it first files a…
Read the full answer →When a corporation becomes insolvent, directors face heightened scrutiny of decisions made in the period leading up to and after insolvency. Several…
Read the full answer →Yes. Under the common law doctrine of vicarious liability, a corporation is generally responsible for wrongful acts committed by its employees in the…
Read the full answer →Potentially, yes. When a corporation carries on business under a name other than its exact corporate legal name, it must register that business name…
Read the full answer →The government filing fees for federal and Ontario incorporation are broadly comparable for a basic incorporation, though the amounts differ and both…
Read the full answer →A 50/50 ownership structure — where two shareholders each hold half the company — creates an inherent risk of deadlock. If the two shareholders…
Read the full answer →A non-disclosure agreement (NDA) is a standalone contract whose sole or primary purpose is to protect confidential information. A confidentiality…
Read the full answer →The shareholder rights framework under the Canada Business Corporations Act and the Ontario Business Corporations Act is broadly similar for private…
Read the full answer →Under the Ontario Business Corporations Act, a director who has a material interest in a contract or transaction that the corporation is considering…
Read the full answer →Generally, no. The corporate opportunity doctrine is a branch of directors' fiduciary duties in Ontario. A director who learns of a business…
Read the full answer →Yes. The Ontario Business Corporations Act expressly permits a corporation to indemnify a director or officer against costs, charges, and expenses…
Read the full answer →Yes, in certain respects. Dissolution of an Ontario corporation does not automatically extinguish all pre-dissolution liabilities of directors. The…
Read the full answer →The core director liability framework is substantially similar under both the federal Canada Business Corporations Act and the Ontario Business…
Read the full answer →Yes, in certain circumstances. While the corporation is a separate legal person that can be liable for its own torts — negligence, nuisance, fraud, and…
Read the full answer →Yes. The Ontario Business Corporations Act restricts a corporation from paying out capital to shareholders — through share redemptions, share…
Read the full answer →Yes. This is one of the most practically significant personal liabilities a director can face. Under the federal Income Tax Act, directors of a…
Read the full answer →Yes. Under Ontario's Occupational Health and Safety Act, a director or officer of a corporation is personally liable for ensuring the corporation…
Read the full answer →Yes. Under the federal Excise Tax Act, directors of a corporation are jointly and severally liable with the corporation for unremitted HST (and GST)…
Read the full answer →Yes. Under Ontario's Pension Benefits Act, directors of an Ontario corporation that sponsors a registered pension plan can face personal liability for…
Read the full answer →Yes. The Ontario Business Corporations Act prohibits a corporation from declaring or paying a dividend if there are reasonable grounds to believe the…
Read the full answer →Yes. Under the Ontario Business Corporations Act, directors of an Ontario corporation are jointly and severally liable for up to six months of wages…
Read the full answer →Resigning as a director can limit future exposure, but it does not eliminate liability for obligations that arose while you were a director. For source…
Read the full answer →Yes. Ontario's Environmental Protection Act gives the Ministry of the Environment, Conservation and Parks broad powers to issue orders requiring the…
Read the full answer →Yes. Under the Employment Standards Act, 2000 (Ontario), directors of Ontario corporations can be personally liable for unpaid wages owed to employees.…
Read the full answer →Directors' and officers' (D&O) liability insurance is a specialized policy that protects individuals serving as directors and officers against personal…
Read the full answer →An Ontario corporation must have at least one director. Directors are elected by shareholders and are responsible for overseeing the management of the…
Read the full answer →Dissolution and bankruptcy are very different outcomes, though both end a corporation's existence. Voluntary dissolution is a controlled, deliberate…
Read the full answer →Including a dividend policy in a shareholder agreement is optional but can prevent significant disputes down the road. By default under the Ontario…
Read the full answer →A shareholders' agreement is not legally required, but for any corporation with more than one owner it is one of the most important documents you can…
Read the full answer →No. You can legally operate a business in Ontario as a sole proprietor or as part of a partnership without ever incorporating. Incorporation is a…
Read the full answer →Outside directors face the same categories of potential personal liability as inside directors — including liability for unremitted source deductions,…
Read the full answer →Drag-along and tag-along rights are provisions in a shareholders' agreement that govern what happens when a controlling shareholder wants to sell the…
Read the full answer →Drag-along and tag-along rights are companion provisions commonly found in shareholder agreements, particularly where there is a majority and a…
Read the full answer →Due diligence is the investigation a buyer conducts to verify what they are actually purchasing. In Ontario business acquisitions, due diligence…
Read the full answer →The due diligence defence allows a director to escape personal liability — most commonly for unremitted source deductions or HST — by demonstrating…
Read the full answer →Environmental due diligence is critical in any Ontario asset purchase involving real property, manufacturing equipment, or operations that handle…
Read the full answer →As a corporation approaches insolvency or becomes insolvent, Ontario courts have recognized that the interests of creditors become increasingly central…
Read the full answer →An earn-out is a deal structure where a portion of the purchase price is paid after closing, contingent on the business hitting certain financial…
Read the full answer →Yes. Ontario's Electronic Commerce Act, 2000 generally gives electronic signatures the same legal validity as handwritten signatures for most…
Read the full answer →When a business is sold in Ontario, what happens to employees depends significantly on whether the deal is structured as a share purchase or an asset…
Read the full answer →A well-drafted employment agreement in Ontario should address the role and responsibilities, compensation (base salary, bonus, commission structure),…
Read the full answer →Ontario's Employment Standards Act, 2000 (ESA) sets the floor for most employment terms in the province. Key minimums include: the provincial minimum…
Read the full answer →Whether it makes sense to incorporate and offer services through your corporation rather than as an employee depends on the nature of your work and…
Read the full answer →An estate freeze is a tax and succession planning strategy that "freezes" the current value of your business shares in your hands and shifts future…
Read the full answer →An estate freeze is a tax and estate planning strategy used in Ontario family corporations to cap the current owner's exposure to capital gains tax at…
Read the full answer →An exit provision is among the most important things to address in a shareholder agreement, and it's easiest to negotiate before anyone actually wants…
Read the full answer →Federal corporations incorporated under the Canada Business Corporations Act must file an annual return with Corporations Canada each year. The annual…
Read the full answer →The answer depends on which jurisdictions are involved. A federal corporation (incorporated under the CBCA) and an Ontario provincial corporation…
Read the full answer →Directors of a federal corporation incorporated under the Canada Business Corporations Act carry legal obligations under both the CBCA and, to the…
Read the full answer →No. Dissolving your federal corporation with Corporations Canada does not automatically cancel your Ontario extra-provincial registration. These are…
Read the full answer →Under the Canada Business Corporations Act, a federal corporation may use an English form, a French form, or both forms of its name. It is not…
Read the full answer →Yes. A federal corporation incorporated under the Canada Business Corporations Act has the right to conduct business anywhere in Canada, but Ontario…
Read the full answer →Under the Canada Business Corporations Act, a federal corporation must have a registered office in Canada — it does not have to be in any specific…
Read the full answer →Both federal and Ontario provincial incorporations can typically be completed quickly, though processing times vary and can change based on demand and…
Read the full answer →For opening a business bank account in Canada, both federal and Ontario provincial corporations are treated equally by banks. Major Canadian banks will…
Read the full answer →Yes, in a practical sense. When you incorporate federally under the Canada Business Corporations Act, the NUANS name search covers all of Canada — so…
Read the full answer →Ontario businesses can incorporate under the Ontario Business Corporations Act (OBCA) or federally under the Canada Business Corporations Act (CBCA).…
Read the full answer →A force majeure clause excuses one or both parties from performing their contract obligations when extraordinary events beyond their control make…
Read the full answer →Issuing shares correctly to founders at the time of incorporation sets the foundation for all future corporate governance and avoids expensive…
Read the full answer →Ontario's Arthur Wishart Act (Franchise Disclosure), 2000 requires franchisors to provide prospective franchisees with a disclosure document at least…
Read the full answer →A governing law clause specifies which province's or country's law applies to interpret and enforce the contract. A dispute resolution clause says…
Read the full answer →An operating company is the corporation that actually conducts the business — signing contracts with clients, employing staff, generating revenue, and…
Read the full answer →A holding company (or "holdco") is a corporation whose primary purpose is to hold shares in another corporation rather than carry on an active business…
Read the full answer →Not automatically. Each corporation in a corporate group — holding company and operating subsidiaries — is a separate legal person. Being a director of…
Read the full answer →The cost of incorporating in Ontario has two components: government filing fees and professional fees if you use a lawyer. The Ontario government…
Read the full answer →Under the Ontario Business Corporations Act, the directors of a corporation set the price at which new shares are issued. The OBCA requires that…
Read the full answer →Adding a new shareholder to an Ontario corporation can happen in two ways: the corporation issues new shares to the incoming shareholder (a primary…
Read the full answer →To incorporate under the Ontario Business Corporations Act (OBCA), you file Articles of Incorporation with the Ontario Ministry of Public and Business…
Read the full answer →As an owner-manager of an Ontario corporation, you have two main options for taking money out of the corporation: salary and dividends. Many owners use…
Read the full answer →Your HST obligations depend on your revenue, not your legal structure. Whether you operate as a sole proprietor or a corporation, you must register for…
Read the full answer →Ontario's Human Rights Code prohibits discrimination based on protected grounds — including disability, family status, creed, age, sex, gender…
Read the full answer →Many entrepreneurs start operating as sole proprietors, build some revenue, and then incorporate later. There is no law requiring you to incorporate…
Read the full answer →This is one of the first decisions to make when incorporating, and the answer depends on your business plans. An Ontario provincial corporation is…
Read the full answer →The government filing fee for incorporating an Ontario corporation varies depending on whether you apply online through the Ontario Business Registry…
Read the full answer →The distinction between an employee and an independent contractor matters enormously in Ontario — it determines whether the worker is entitled to ESA…
Read the full answer →No. The Ontario Business Corporations Act does not require private corporations to have independent directors. Independence requirements — such as…
Read the full answer →Yes, and this is one of the most practically important provisions a minority shareholder can negotiate. Under the Ontario Business Corporations Act,…
Read the full answer →Yes, it matters significantly. Courts in Canada distinguish between inside directors and outside directors when assessing whether the due diligence…
Read the full answer →Federal incorporation is often preferred by businesses that plan to raise investment from institutional or angel investors, particularly if that…
Read the full answer →Terminating an employee for just cause in Ontario means dismissing them without any notice or pay in lieu of notice, because their conduct is serious…
Read the full answer →Ontario's Employment Standards Act, 2000 permits temporary layoffs under specific conditions without the layoff being treated as a termination — but…
Read the full answer →As a sole proprietor, your personal liability is unlimited. If a client sues your business and wins a judgment larger than your business assets, they…
Read the full answer →Piercing the corporate veil — holding a director or shareholder personally responsible for the corporation's debts or actions — is an exceptional…
Read the full answer →Limitation of liability clauses — provisions that cap the amount one party can recover from the other — are generally enforceable in Ontario between…
Read the full answer →Limitation periods for director liability vary depending on the type of claim. Under Ontario's Limitations Act, the basic two-year limitation period…
Read the full answer →Ontario corporations that fail to file required annual returns with the Ontario Business Registry will eventually be cancelled (administratively…
Read the full answer →A material adverse change (MAC) clause — also called a material adverse effect (MAE) clause — in an Ontario business purchase agreement allows the…
Read the full answer →Minority shareholders in an Ontario private corporation have several protections under the Ontario Business Corporations Act, even without a…
Read the full answer →Ontario corporations incorporated under the Business Corporations Act are required to maintain a minute book — a set of corporate records — at their…
Read the full answer →Yes, maintaining a minute book is a legal requirement for Ontario corporations under the Business Corporations Act. The minute book is the…
Read the full answer →Ontario corporations can create multiple classes of shares, each with different rights, and there are several legitimate reasons to do so. The most…
Read the full answer →Yes. A nominee director — someone placed on a board to represent the interests of a particular shareholder, lender, or appointing party — is a director…
Read the full answer →Technically, another person can serve as a director of your corporation, but Ontario has progressively reduced the privacy benefit. Ontario…
Read the full answer →When you sell a business in Ontario, it is standard practice for the buyer to require the seller to sign a non-competition agreement. Unlike employment…
Read the full answer →Yes, shareholder agreements in Ontario can include non-competition obligations, but their enforceability depends on whether they are reasonable in…
Read the full answer →Non-voting shares are a class of shares that do not carry the right to vote at shareholder meetings. Holders of non-voting shares have an economic…
Read the full answer →A not-for-profit corporation is an entity organized for a purpose other than profit — it can be a sports club, neighbourhood association, arts…
Read the full answer →When you incorporate in Ontario, the government can automatically assign a number to your corporation — for example, "1234567 Ontario Inc." — or you…
Read the full answer →Both federal and Ontario provincial incorporations can result in a numbered corporation. If you file Articles of Incorporation without specifying a…
Read the full answer →Both the Ontario Business Corporations Act and the Canada Business Corporations Act are modern statutes with similar approaches to share structure, so…
Read the full answer →Yes. Officers of a corporation who personally participate in, direct, authorize, or acquiesce in fraudulent conduct can face both civil and criminal…
Read the full answer →Under the Ontario Business Corporations Act, officers owe the corporation the same core duties as directors — the duty to act honestly and in good…
Read the full answer →Ontario's Business Corporations Act provides two processes for amalgamating corporations: the long-form amalgamation and the short-form amalgamation. A…
Read the full answer →Yes. Under the Ontario Business Corporations Act, a corporation must place financial statements before its shareholders at each annual meeting or with…
Read the full answer →Ontario corporations must file an annual return with the Ontario Business Registry every year. This is not the same as your corporate income tax return…
Read the full answer →Ontario corporations incorporated under the Business Corporations Act (Ontario) must file an annual return with the Ontario government each year. The…
Read the full answer →An Ontario corporation must file articles of amendment whenever it makes a change that alters the corporation's constitutional documents — its articles…
Read the full answer →Under the Ontario Business Corporations Act, the auditor of a corporation is appointed by the shareholders at each annual meeting to hold office until…
Read the full answer →A Business Number (BN) is a unique nine-digit number assigned by the Canada Revenue Agency to identify your corporation for federal tax purposes. Think…
Read the full answer →Articles of incorporation are the constitutional document of an Ontario corporation. They are filed with the government when the corporation is formed…
Read the full answer →Yes, in certain circumstances. Under the Ontario Business Corporations Act, a corporation that has been dissolved — whether voluntarily or…
Read the full answer →An Ontario corporation that wants to carry on business in Quebec must register as an extra-provincial corporation with the Registraire des entreprises…
Read the full answer →Yes. An Ontario corporation can "continue" into the federal jurisdiction by filing for continuance under the Canada Business Corporations Act (CBCA).…
Read the full answer →Ontario corporations are registered in the Ontario Business Registry, which is publicly searchable. You can obtain a corporate profile report, which is…
Read the full answer →Shareholder deadlock is one of the most challenging situations in a closely held corporation, particularly when shareholders hold equal interests (such…
Read the full answer →Yes. Under the Corporations Information Act (Ontario), a corporation must notify the province when there is a change of directors. The notice of change…
Read the full answer →Voluntarily dissolving an Ontario corporation requires following a formal process under the Ontario Business Corporations Act. The steps generally…
Read the full answer →Under the Ontario Business Corporations Act, a corporation can only pay a dividend if the board of directors determines that after the dividend is…
Read the full answer →Yes, this is one of the more significant personal liability risks for directors of Ontario corporations. Under the Ontario Business Corporations Act…
Read the full answer →Under the Corporations Information Act (Ontario), every Ontario corporation must file an initial return within sixty days of incorporation. The initial…
Read the full answer →Yes, generally. An Ontario corporation can choose any fiscal year-end it likes when it is first established. Common choices include December 31 (to…
Read the full answer →"Good standing" means that your Ontario corporation has met its registration and filing obligations with the Ontario Business Registry and has not been…
Read the full answer →A corporation carrying on commercial activity in Canada must register for GST/HST once its total annual taxable supplies exceed thirty thousand dollars…
Read the full answer →Yes. Insiders of Ontario public corporations — including directors, senior officers, and shareholders who hold more than ten percent of a class of…
Read the full answer →Incorporation provides meaningful but not unlimited personal liability protection. Understanding the limits is just as important as understanding the…
Read the full answer →Ontario corporations are permitted to lend money to directors, but there are restrictions and disclosure requirements that apply. The Ontario Business…
Read the full answer →Under the Ontario Business Corporations Act, the corporate records that must be maintained — including the minute book — must be kept at the…
Read the full answer →Yes. Under the Ontario Business Corporations Act, a corporation must hold an annual meeting of shareholders not later than eighteen months after…
Read the full answer →Changing an Ontario corporation's name involves several steps. First, you conduct a NUANS (Newly Upgraded Automated Name Search) search to confirm the…
Read the full answer →Ontario business corporations are incorporated under the Business Corporations Act (Ontario) or the federal Canada Business Corporations Act. Their…
Read the full answer →Under the Corporations Information Act (Ontario), a corporation must file a notice of change within fifteen days whenever certain corporate information…
Read the full answer →Under the Ontario Business Corporations Act, a private corporation (one that is not offering shares to the public) must have at least one director. A…
Read the full answer →Under the Ontario Business Corporations Act, officers of a corporation are appointed by the board of directors. The process is typically set out in the…
Read the full answer →Directors and officers play different roles in an Ontario corporation. Directors are elected by shareholders and are responsible for supervising the…
Read the full answer →The oppression remedy is one of the most powerful tools available to shareholders of Ontario corporations under the Business Corporations Act. It…
Read the full answer →Yes. If your Ontario corporation pays salaries, wages, bonuses, or other remuneration to employees, it must register for a payroll deductions account…
Read the full answer →Yes, but there are important liability implications. Under the Ontario Business Corporations Act, a person who enters into a contract in the name of or…
Read the full answer →The Ontario Business Corporations Act provides a default quorum for shareholders' meetings: a quorum is present if the holders of a majority of the…
Read the full answer →An Ontario corporation can change its registered office address by passing a resolution of the directors authorizing the change, and then filing a…
Read the full answer →Yes, Ontario's Business Corporations Act allows a dissolved corporation to be revived. Revival is available when the corporation was dissolved…
Read the full answer →No. Under the Ontario Business Corporations Act, a corporation is not required to have a common seal. The Act was amended years ago to remove the…
Read the full answer →No, Ontario corporations are not strictly required to issue paper share certificates. The Ontario Business Corporations Act allows shares to be…
Read the full answer →Yes. The Ontario Business Corporations Act gives shareholders the right to inspect certain corporate records during normal business hours at no charge.…
Read the full answer →Yes, typically you do, especially if there are multiple shareholders. Articles of incorporation are the public constitutional document and cover the…
Read the full answer →Under the Ontario Business Corporations Act, a special resolution is a resolution passed by at least two-thirds of the votes cast at a meeting of…
Read the full answer →Under the Ontario Business Corporations Act, every corporation must maintain a stated capital account for each class and series of shares it issues.…
Read the full answer →Yes, and in fact most private Ontario corporations do include share transfer restrictions in their articles. The most common restriction prevents…
Read the full answer →A unanimous shareholders' agreement (USA) is a specific type of shareholders' agreement that all shareholders sign and that can legally transfer some…
Read the full answer →Using your Ontario corporate name in another province without registering there is legally risky and practically limited. If you carry on business in…
Read the full answer →The terms winding up and dissolution are sometimes used interchangeably, but they describe related but distinct concepts. Dissolution is the legal…
Read the full answer →Yes. A federal corporation incorporated under the Canada Business Corporations Act that carries on business in Ontario must register as an…
Read the full answer →A corporate minute book is the official record of a corporation's governance and history. Ontario corporations are required by the Business…
Read the full answer →Not-for-profit organizations in Ontario can incorporate either provincially under the Ontario Not-for-Profit Corporations Act (ONCA) or federally under…
Read the full answer →Yes, Ontario corporations are legally required to maintain a securities register (also called a share register or shareholders register). This is an…
Read the full answer →Yes. The Ontario Business Corporations Act allows non-distributing corporations (private companies that have not offered shares to the public) to…
Read the full answer →A private Ontario corporation can legally operate with a single director, and many small businesses do exactly that. The sole director is typically…
Read the full answer →Verbal (oral) contracts are generally enforceable in Ontario for most types of commercial agreements, provided the essential elements — offer,…
Read the full answer →No. Par value shares were abolished under the Ontario Business Corporations Act and its predecessors, and all shares incorporated under the OBCA are…
Read the full answer →Whether you need a partnership agreement or a shareholders' agreement depends on the legal structure you choose for your business in Ontario. If your…
Read the full answer →Ontario's Pay Equity Act requires private sector employers with ten or more employees to achieve and maintain pay equity — meaning female job classes…
Read the full answer →If an Ontario corporation does not file its annual return on time, the province can note the corporation in default. A corporation in default loses the…
Read the full answer →When you sign a personal guarantee on a corporation's loan, you are agreeing to be personally responsible for the corporation's debt if the corporation…
Read the full answer →One of the main reasons to incorporate is limited liability — shareholders are generally not personally responsible for the corporation's debts.…
Read the full answer →Courts in Ontario treat piercing the corporate veil as a remedy of last resort — they generally respect the separate legal personality of a…
Read the full answer →Pre-emptive rights (also called anti-dilution rights or pre-emption rights) give existing shareholders the right to purchase their proportional share…
Read the full answer →You can sign a contract before incorporation, but you need to understand who is liable — and take the right steps afterward. A contract signed on…
Read the full answer →Preferred shares are a separate class of shares that carry different rights from common shares — typically, preferential treatment in one or more of…
Read the full answer →Ontario private sector employers are subject to federal privacy legislation — the Personal Information Protection and Electronic Documents Act (PIPEDA)…
Read the full answer →A probationary period is a trial period at the beginning of employment during which the employer can assess whether the employee is suitable for the…
Read the full answer →In practice, professional corporations in Ontario are almost always incorporated provincially under the Ontario Business Corporations Act rather than…
Read the full answer →Registering a business name under Ontario's Business Names Act does not protect the name from being used by others. The provincial registry is a…
Read the full answer →Most Ontario business purchase agreements include purchase price adjustment mechanisms to ensure the buyer pays for the business's actual value at…
Read the full answer →Yes. The process is called continuance or redomiciliation. An Ontario corporation can apply to continue under the Canada Business Corporations Act…
Read the full answer →Under the Business Corporations Act (Ontario), every corporation must have a registered office — a physical address in Ontario where legal documents,…
Read the full answer →In a business purchase agreement in Ontario, representations and warranties are factual statements that the seller makes about the business as at the…
Read the full answer →Yes. The Ontario Business Corporations Act requires that at least twenty-five percent of a corporation's directors be resident Canadians. If a…
Read the full answer →Enforcing non-competition clauses against former employees in Ontario became significantly harder in October 2021, when the Working for Workers Act,…
Read the full answer →A right of first refusal (ROFR) is a contractual provision that requires a shareholder who wants to sell their shares to first offer them to the…
Read the full answer →Yes. Self-employed individuals — including sole proprietors — must pay both the employee and employer portions of Canada Pension Plan (CPP)…
Read the full answer →Yes, severance packages in Ontario are almost always negotiable. When an employer offers severance, the initial offer often reflects the statutory…
Read the full answer →When a Canadian private corporation redeems or repurchases shares from a shareholder, the tax treatment is not the same as a simple sale of shares on…
Read the full answer →Ontario corporations incorporated under the Business Corporations Act (OBCA) or federally under the Canada Business Corporations Act (CBCA) have…
Read the full answer →Under the Ontario Business Corporations Act, a corporation must maintain a share register recording the names and addresses of each shareholder and the…
Read the full answer →When you incorporate, you design the corporation's share structure by setting out the classes of shares and their rights in the articles of…
Read the full answer →Yes, Ontario corporations can authorize multiple classes of shares with different voting rights, provided the differences are clearly set out in the…
Read the full answer →Dilution occurs when a corporation issues new shares, which reduces the ownership percentage of existing shareholders even though the number of shares…
Read the full answer →Yes, Ontario private corporations can grant stock options to employees. A stock option gives the recipient the right to purchase shares in the…
Read the full answer →The Ontario Business Corporations Act requires every Ontario corporation to maintain a securities register at its registered office or at another…
Read the full answer →Yes, an Ontario corporation can acquire its own shares — either through a redemption (where the articles give the corporation the right to buy the…
Read the full answer →A share split (or stock split) occurs when a corporation divides its existing shares into a larger number of shares. For example, a two-for-one split…
Read the full answer →The share structure you set up on incorporation affects how you can plan for taxes, bring in investors, split ownership, and exit the business. Getting…
Read the full answer →Whether your Ontario business is sold as a share sale (the buyer purchases the shares of the corporation) or an asset sale (the buyer purchases the…
Read the full answer →A share subscription agreement is a contract between a corporation and a person (or entity) who is agreeing to purchase a specified number of shares at…
Read the full answer →Yes. Restricting share transfers is one of the most common and important features of an Ontario private corporation's shareholder agreement (and may…
Read the full answer →Share transfer restrictions can appear in the articles of incorporation, in a shareholder agreement, or in both — and each location has different legal…
Read the full answer →Valuing shares in a private Ontario corporation is more complex than valuing publicly traded shares, because there is no market price to look up.…
Read the full answer →Share vesting is a mechanism where a shareholder earns their full ownership over time or upon hitting certain milestones, rather than receiving all…
Read the full answer →Without a dispute resolution clause in a shareholder agreement, a deadlock between shareholders often has no clean internal solution. The parties are…
Read the full answer →A shareholders' agreement is a private contract among the shareholders of a corporation that governs their relationship, rights, and obligations. For a…
Read the full answer →When a new investor joins an Ontario private corporation, the existing shareholder agreement needs to be addressed. There are generally two approaches:…
Read the full answer →If you are the sole shareholder, a shareholder agreement is less urgent — though even then, a unanimous shareholder agreement (USA) can be used to…
Read the full answer →Articles of incorporation and a shareholder agreement are two distinct and complementary documents that together govern an Ontario corporation. The…
Read the full answer →A shareholder loan is money that flows between a corporation and its shareholder — either the shareholder lends money to the corporation, or the…
Read the full answer →Whether to contribute money to your Ontario corporation as a shareholder loan or as equity (by subscribing for shares) has both legal and tax…
Read the full answer →Generally, no. One of the most fundamental principles of corporate law is limited liability. When you invest in a corporation — whether an Ontario…
Read the full answer →Shareholders' rights under the Business Corporations Act (Ontario) depend partly on their class of shares, but several baseline rights apply broadly.…
Read the full answer →Shares in an Ontario corporation can be held by a trustee on behalf of a beneficiary. This is common in estate planning (where shares are held by a…
Read the full answer →Shares and units are both forms of ownership interest in a business entity, but they arise in different legal structures with different legal, tax, and…
Read the full answer →A shelf company is a corporation that was incorporated but has never conducted business and has been "sitting on a shelf" waiting to be sold to someone…
Read the full answer →A shotgun clause (also called a buy-sell clause) is a dispute-resolution mechanism built into many shareholder agreements. It works as follows: one…
Read the full answer →An individual director does not automatically have authority to bind the corporation by signing a contract, simply by virtue of being a director.…
Read the full answer →A sole proprietor in Ontario must keep business records that support the income and expenses reported on their personal income tax return. These…
Read the full answer →Yes. A sole proprietorship can hire employees just like a corporation. Being incorporated is not a prerequisite for becoming an employer. Once you hire…
Read the full answer →Yes. You can incorporate at any point and transfer your sole proprietorship business into the new corporation. This is a common path — many businesses…
Read the full answer →A sole proprietorship has one owner. A partnership arises when two or more persons carry on business together with a view to profit — even without a…
Read the full answer →A sole proprietorship is the simplest business form: you and your business are legally the same person. All profits flow directly to your personal tax…
Read the full answer →Including your spouse as a shareholder — or structuring share classes so dividends can be directed to a spouse — is a common tax planning strategy, but…
Read the full answer →Many professionals in Ontario can incorporate, but under specific rules set by their governing bodies rather than the general Business Corporations…
Read the full answer →Ontario's Environmental Protection Act and similar provincial statutes impose strict liability for environmental offences but provide a due diligence…
Read the full answer →Stock option plans allow employees and service providers to purchase shares in a corporation at a fixed price (the exercise price) set at the time the…
Read the full answer →As a sole proprietor, all net business income is added to your other income and taxed at your personal marginal rate in the year it is earned — even if…
Read the full answer →When terminating an employee without cause in Ontario, you must provide either working notice or pay in lieu of notice (or a combination). The minimum…
Read the full answer →Yes, in certain circumstances. A third party — a customer, supplier, employee, or member of the public — can bring a claim directly against a director…
Read the full answer →Under the Ontario Business Corporations Act, a corporation that acquires its own shares must cancel those shares immediately upon acquisition — they…
Read the full answer →Under the Ontario Business Corporations Act, a unanimous shareholder agreement (USA) is a specific type of shareholder agreement signed by all…
Read the full answer →A unanimous shareholder agreement (USA) is a specific type of agreement under the Business Corporations Act (Ontario) that all shareholders of a…
Read the full answer →Vendor take-back (VTB) financing is an arrangement where the seller of a business agrees to finance part of the purchase price themselves, rather than…
Read the full answer →Ontario directors have several ongoing disclosure obligations rooted in statute and common law. The most prominent is the duty to disclose material…
Read the full answer →Yes, you can make changes to your Ontario corporation's articles after incorporation by filing Articles of Amendment with ServiceOntario. Common…
Read the full answer →Corporate by-laws are the internal rules that govern how your corporation operates day to day. They address things like how directors are elected and…
Read the full answer →Common shares are the standard form of equity ownership in a corporation. In an Ontario corporation, common shareholders are typically entitled to vote…
Read the full answer →Yes. Under the Ontario Business Corporations Act, directors may pass a resolution without holding a formal meeting if all directors consent to the…
Read the full answer →Corporate resolutions are formal written records of decisions made by the directors or shareholders of a corporation. They are the way a corporation…
Read the full answer →Incorporating a business means creating a separate legal entity — a corporation — that is distinct from you as an individual. In Ontario, a corporation…
Read the full answer →A well-drafted Ontario shareholder agreement typically addresses several core areas. First, it defines share transfer restrictions — for example, a…
Read the full answer →Receiving your certificate of incorporation is only the beginning. There are several practical steps to take before your corporation is fully…
Read the full answer →An Ontario director who breaches their duties may face several consequences depending on the nature and severity of the breach. The corporation — or…
Read the full answer →When an Ontario shareholder dies without a shareholder agreement in place, their shares become part of their estate and pass according to their will…
Read the full answer →A Canadian-controlled private corporation (CCPC) is a specific tax classification under the federal Income Tax Act. To qualify, the corporation must be…
Read the full answer →A derivative action is a lawsuit brought by a shareholder or creditor on behalf of the corporation, not for their own personal benefit but to enforce a…
Read the full answer →A holding company (sometimes called a "Holdco") is a corporation that exists primarily to own shares or assets rather than to actively carry on a…
Read the full answer →A corporate minute book is the official record of your corporation's most important documents and decisions. Under the Ontario Business Corporations…
Read the full answer →A NUANS (Newly Upgraded Automated Name Search) report is a search of existing registered and reserved business names, trademarks, and corporate names…
Read the full answer →A numbered company is an Ontario corporation that uses its assigned corporate number as its legal name, for example "1234567 Ontario Inc." It has no…
Read the full answer →Yes — many licensed professionals in Ontario can incorporate through what is called a "professional corporation." Eligible professions include lawyers,…
Read the full answer →Every Ontario corporation must have a registered office address in Ontario. This is the official address where legal documents — including court…
Read the full answer →A shareholder agreement is a private contract among the owners of a corporation that governs how they relate to each other and to the company itself.…
Read the full answer →A sole proprietorship is the simplest form of business in Ontario. You and the business are the same legal entity — there is no separation between your…
Read the full answer →Yes, but only through a very specific legal mechanism: a Unanimous Shareholders Agreement, commonly called a USA. Under the Ontario Business…
Read the full answer →An annual return is a filing that every Ontario corporation must submit each year to confirm that its information on the Ontario Business Registry is…
Read the full answer →A corporation is a separate legal person created by law. When you incorporate in Ontario under the Business Corporations Act (OBCA) or federally under…
Read the full answer →Continuance is the legal process by which a corporation changes the statute under which it is governed without ceasing to exist. A corporation…
Read the full answer →Under the Business Corporations Act (Ontario), directors owe two fundamental duties to the corporation. The first is a fiduciary duty — the duty to act…
Read the full answer →Closing an Ontario corporation involves either voluntary dissolution under the Ontario Business Corporations Act or, in some cases, a more formal…
Read the full answer →An entire agreement clause (sometimes called an integration clause) states that the written contract represents the complete agreement between the…
Read the full answer →Extra-provincial registration in Ontario is the process by which a corporation incorporated outside of Ontario — whether federally under the CBCA or in…
Read the full answer →Goodwill is the value of a business beyond its tangible assets — customer relationships, reputation, brand, know-how, and the expectation of continued…
Read the full answer →An indemnification clause (sometimes called an indemnity) is a contractual promise by one party to compensate the other for certain losses, claims, or…
Read the full answer →A letter of intent (LOI) is a preliminary document that outlines the key terms of a proposed business transaction before the parties negotiate and sign…
Read the full answer →No, they are different filings. Federal corporations incorporated under the Canada Business Corporations Act file their annual return directly with…
Read the full answer →The oppression remedy is one of the most powerful tools in Ontario corporate law. Under the Ontario Business Corporations Act, a court may make any…
Read the full answer →Your share structure is the framework that describes the types of shares your corporation can issue and what rights each class carries. It is set out…
Read the full answer →The business judgment rule is a judicial principle that courts will not second-guess a board's decision simply because it turned out badly, provided…
Read the full answer →Under the Ontario Business Corporations Act, every director and officer must act honestly and in good faith with a view to the best interests of the…
Read the full answer →A fiduciary duty is a duty of loyalty. A director who owes a fiduciary duty to the corporation must put the corporation's interests ahead of their own…
Read the full answer →For a commercial contract to be enforceable in Ontario, it must satisfy a few core requirements. There must be a clear offer, acceptance of that offer,…
Read the full answer →The Ontario Business Corporations Act requires every Ontario corporation to maintain a registered corporate records office and to keep certain books…
Read the full answer →There is no single revenue trigger that tells you it is time to incorporate, but several signals commonly push entrepreneurs in that direction.…
Read the full answer →For most small businesses that operate exclusively in Ontario, a provincial Ontario incorporation under the Ontario Business Corporations Act is the…
Read the full answer →Directors and officers are two different roles inside a corporation, though the same person can hold both. Directors are elected by shareholders to…
Read the full answer →Under Ontario's Occupational Health and Safety Act (OHSA), employers are required to have a written policy addressing workplace harassment and…
Read the full answer →If you believe you were wrongfully dismissed in Ontario — meaning your employer terminated you without providing adequate notice or pay in lieu — you…
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