Compliance For Newly Incorporated Company: What To Do Next

So you’ve incorporated your company, but what comes next? One of the most important things you need to be on top of is maintaining its good legal standing. If you’re feeling confused on how, we’ve got you covered. Just follow the steps in this guide and you’ll be well on your way to fulfilling the compliance requirements for your corporation.

What is required immediately after incorporation of a company?

There are a few items you’ll need to tackle right after you’ve incorporated to avoid being non-compliant with the law. Many of these legal requirements to maintain compliance can be taken care of automatically when you use Ownr to incorporate your company.

Appoint your executive team

Every incorporated company in Canada needs an executive team, consisting of the directors and officers of your corporation.

When you incorporate your business with Ownr, you’ll appoint your executive team before you incorporate, meaning once your transaction is complete, there’s one less thing to worry about—just one of the many ways we help you stay compliant.

Here’s what you need to know about filling these roles.

Founding directors

Also referred to as the first directors, your corporation’s founding directors should have been already listed on one of the forms you submitted when you filed for incorporation.

The individuals named as first directors in your articles of incorporation are required to act as directors starting from the date your certificate of incorporation is issued and ending at the first meeting of shareholders. At this point, their role as directors is complete, and the shareholders of the corporation must elect the next directors moving forward. Founding directors can be elected to the board of directors, but this is not a requirement.

In your articles of incorporation, you would have specified whether the number of directors on the board is fixed, or whether there is a maximum or minimum number of directors required. If you want to make changes to the requirements for the board of directors, you need to file a form and pay a fee to Corporations Canada.

Some corporations have only one director, who can also simultaneously be the sole shareholder and officer. However, if it is a soliciting corporation, there must be a minimum of three directors, at least two of whom are not officers or employees of the corporation or its affiliates.

Officers

The officers of a corporation are appointed by the board of directors and are responsible for the day-to-day business operations. They can occupy any position decided upon by the board, and the title of officer includes roles such as chairperson of the board, president, vice-president, secretary, treasurer, comptroller, general counsel, general manager, and any other role that performs similar functions.

A director or member of the corporation can be appointed to be an officer, but officers can also be individuals who are neither a director nor a member. The same person can hold multiple officer roles at one time.

Schedule the first shareholders’ meeting

A corporation’s board of directors are required to call the first shareholders’ meeting within 18 months of the date of incorporation. This meeting is usually held after the organizational meeting, so that shareholders can vote on decisions made at the first meeting.

At the first shareholders’ meeting, the shareholders will elect the directors of the corporation. If the new directors are different from the first directors, Corporations Canada must be notified within 15 days of the change being made. This is a requirement whenever new directors are elected or a current director is removed from the board. Similarly, whenever the address of a director changes, the director must inform the corporation within 15 days of the change, and the corporation must then inform Corporations Canada within 15 days.

As well as electing the directors, the first shareholders’ meeting may be used to accept, modify, or reject the by-laws set out by the directors, and to appoint an auditor.

Call your first organizational meeting

Soon after your certificate of incorporation is issued, you should call your company’s first organizational meeting. You need to provide notice to each of your first directors indicating the date, time, and location at least five days prior to the meeting.

While there are no specific tasks that are required to take place at this meeting, here are some of the topics you should cover:

making by-laws (rules that govern the corporation’s activities and are set by directors, then approved by shareholders at the first shareholders’ meeting)
determining the forms of share certificates and the corporate records you intend to use
authorizing the issuing of shares and other securities
appointing officers
appointing an interim auditor (until one can be appointed at the first shareholders’ meeting)
making banking arrangements, including deciding which financial institution to bank with
any other outstanding business.

Consider by-laws not governed by the Canada Business Corporations Act (CBCA)

A corporation’s by-laws determine how business operations are conducted. The Canada Business Corporations Act (CBCA) already has a number of rules that must be followed in order for a corporation to remain compliant, some of which can be modified to better suit your purposes. You may also choose to introduce additional by-laws not covered by the CBCA.

If you’re unsure what type of by-laws your corporation might benefit from, consider starting with model by-laws. Here are some ideas for by-laws you’ll probably want to set:

the date of your financial year-end
banking arrangements
rules around the appointment, qualifications, and duties of the officers
who is responsible for setting salaries and other remuneration for the directors and officers
procedures around calling and conducting meetings
the minimum amount of people required at a meeting to establish quorum

You may also want to go over what changes can be made to the by-laws under the CBCA.

Directors are allowed to make, repeal, and amend by-laws, so if you don’t want the directors of your corporation to have these abilities, you need to specify that in your by-laws. All new by-laws, changes to existing by-laws, and repeals must be passed by the board of directors and then approved by the shareholders at the next shareholders’ meeting. A by-law is considered passed and effective on the date it is agreed upon by the directors, not the date it is approved by the shareholders.

Future business considerations

The next steps after incorporation may depend on your business plans and goals for the company, as well as what steps you have already taken prior to incorporation. Every business has different needs, but here are the main three steps you should take after incorporation to set your company up for success.

Open a business bank account. This is a legal requirement for all corporations, since it keeps your personal funds separate from those of the corporation. When you meet with the bank to set up your account, they may require a copy of your articles of incorporation, as well as your certificate of incorporation, and confirmation that you are a director. Your business bank account must be opened under the full corporate name of your company.
Receive payment from shareholders in exchange for their shares. The amount each shareholder owes should be set out in the First Directors Resolution in your corporate minute book, which is automatically created for you when you incorporate with Ownr. This is where each shareholder will be listed, along with what class or series of shares they have, how many shares they hold, and the total price for the shares (which is the amount owed to the corporation). This payment should be made to the corporation’s business bank account either by cheque or email money transfer rather than cash, so that there will be an official written record of the payment.
Register for a GST/HST number. While it is not legally necessary to register and begin charging taxes on your corporation’s products and services until your company has earned $30,000 in annual gross revenue, if you anticipate meeting this threshold, it may make sense to register ahead of time. This way, you’ll be able to start accumulating tax credits for your business expenses right away, and potentially receive a tax refund.

Later in the year

This next set of tasks won’t necessarily be completed right away, but will need to be handled in your first year post-incorporation.

File annual return

One of the major responsibilities of an incorporated business is to file their annual return each year. Your annual return is the confirmation of the meetings and written resolutions your business legally requires to be in good standing.

Typically a business would need a lawyer to draw up the required documents, but thankfully Ownr simplifies the process by asking a few simple questions in your Dashboard. We’ll obtain the signatures required, automatically update your Minute Book, prepare your resolutions, and file your return with the government.

File tax return

In addition to submitting an annual return to Corporations Canada, you are required to file an annual income tax return every year, even if there is no tax payable. Tax returns and annual returns for corporations are not the same thing, so make sure to keep on top of all of the filing requirements in order to remain compliant.

When it comes time to file your corporation’s annual tax return, filing electronically can save you time, money, and paperwork. Once you’ve submitted your return online, you’ll get immediate confirmation that your return has been received, which is important legal proof to have in your records. You’ll also get a faster notice of assessment and faster refunds than if you file by mail.

Your tax return is due no more than six months after the end of your corporation’s tax year, otherwise known as the financial/fiscal year-end that you decided at your first directors’ meeting.

Individuals with Significant Control

In addition to shareholders, board members, and officers, there is another category of controlling bodies that company owners need to be aware of; Individuals with Significant Control, or Significant Individuals in British Columbia.

Individuals with Significant Control has numerous definitions, which you can read more about in our helpful primer on ISCs. In simplest terms, however, ISCs are people who have influence or control over a company, but do not necessarily hold a direct role or formal title.

If your company has Individuals with Significant Control, you must record certain information about them in your “Register of Individuals with Significant Control”, sometimes called a “Transparency Register”. The exact information required may vary from province to province, the record typically includes the following information:

Name
Date of birth
Address
Country of residence for tax purposes
Country of citizenship
Dates when significant control or influence started and ended
Description of how the individual holds significant control
Steps taken by the corporation to identify it Individuals with Significant Control

Failure to maintain these records can come with a heavy penalty of up to $1,000,000 or up to five years in prison for a federal incorporation. Ownr can help you record your ISCs, keeping your company in good legal standing.

Compliance for newly incorporated companies FAQs

Now that you know the basics of keeping your newly incorporated company compliant, let’s go over some of the most frequently asked questions about keeping a corporation in good legal standing.

What is meant by post-incorporation?

The term post-incorporation refers to the time beginning immediately after your certificate of incorporation is issued by Corporations Canada. Post-incorporation compliances include everything required after incorporation in order to remain in compliance.

How many board meetings are needed for a newly incorporated company?

There is no universal number of board meetings required for a newly incorporated company. Directors of a corporation are required to meet on a regular basis, but the regularity and frequency of board meetings depends on the needs of the corporation.

What is LLP annual compliance?

An LLP, or limited liability partnership, is not considered a corporation in Canada. Therefore, the annual compliance required for an LLP is different from the information set out in this article regarding post-incorporation compliance. While partnerships are not required to submit annual filings to Corporations Canada, they may need to register with their province or territory, get a federal business number and tax accounts, and apply for other permits and licenses in order to operate legally.

With all of this information in hand, you’ll be able to conduct business with total confidence in your corporation’s legal compliance.