Continuance (import) of an incorporated business

Learn how to prepare a request to continue (import) an incorporated business under the Canada Business Corporations Act (CBCA).

Note

Although the information provided here will assist you in completing the continuance process quickly and accurately, it is not intended to replace legal advice. You may wish to consult a lawyer or other professional advisor to ensure that the specific needs of your incorporated business are met.

Table of Contents

What is a continuance (import) and when does it come into effect?

A continuance (import) allows an incorporated business to effectively re-incorporate under another act. Because it is already incorporated, the legal process is called continuance. Instead of incorporating again, the incorporated business continues from one act into another so that it is governed by that other act as though it were incorporated under it. The process results in the corporation being exported out of one act and being imported into another.

The continuance comes into effect on the date shown on the Certificate of Continuance issued by Corporations Canada.

Who can continue (import) under the CBCA?

An incorporated business must be incorporated under another act that is federal, provincial or territorial or is even from another country. That act must permit the continuance.

What documents must be filed to continue (import) an incorporated business?

An application for continuance must include:

The articles can be in English or French or in a bilingual format.

If the incorporated business is governed by an act that has been pre-approved by Corporations Canada also include:

  • A letter of approval from the legislative authority that administers the act currently governing the incorporated business. This document is not required if the incorporated business is governed by another federal act.

If the incorporated business is not governed by another federal act or by an act that has been pre-approved by Corporations Canada, the following documents must also be filed:

  • A letter of approval from the legislative authority that administers the act currently governing the incorporated business.
  • A copy of the sections of the act under which the incorporated business currently exists showing that the continuance is permitted.
  • A signed legal opinion by counsel qualified to practice in the jurisdiction where the incorporated business is incorporated, stating that:
    • the non-federal law permits continuances to the CBCA,
    • once the incorporate business is continued under the CBCA, the non-federal law will cease to apply to it, and
    • in cases where the other legislative authority does not make it a practice to issue a formal authorization for continuance, the incorporated business meets all the requirements for export.

Annex A

Instructions for completing Form 11 – Articles of Continuance

Item 1: Corporate name

Indicate your proposed corporate name.

The proposed name must include one of the following legal elements: Limited, Limitée, Incorporated, Incorporée, Corporation, Société par actions de régime fédéral, Ltd., Ltée, Inc., Corp. or S.A.R.F.

Since it is mandatory to write Ltd., Inc., Corp. and S.A.R.F. with a period, Corporations Canada will add one if it is not already included.

The proposed name must be distinctive, meaning that it must not be misleading or likely to be confused with names used by other organizations and businesses. In general, a corporate name is distinctive if it does not make those who encounter it think of another organization or business. You must include a valid Nuans Name Search Report unless you would like a number name (for example, 123456 Canada Inc.). Corporations Canada will use the Nuans Name Search Report to determine whether the name is distinctive and otherwise meets the requirements of the CBCA.

The Nuans Name Search Report must be dated not more than ninety (90) days prior to the receipt of the articles by Corporations Canada. If the proposed corporate name consists of both an English and a French version, and not a combined English and French version, it will be necessary to provide a Nuans Name Search Report for each language.

For more information about choosing a name, see Name a corporation.

If your corporate name has been pre-approved by Corporations Canada, attach a copy of the letter of approval to your application. If the pre-approval letter is not included or if the name has not been pre-approved, the name will be considered for approval when the application is processed.

The CBCA allows you to choose a numbered name as your legal name (for example, 1234567 Canada Inc.). To obtain a numbered name, leave a blank space (in which Corporations Canada will insert an assigned number), followed by the word Canada and the legal element of your choice, such as Incorporated, Inc., Limited, Ltd., Corporation, Corp., etc.

Example: space to insert full corporate name Canada Limited

If you are incorporating under a combined bilingual name, or separate English and French forms of the name, the corporate name is indicated here.

Examples:

  • combined name – Cars ABC Autos Inc.
  • separate English and French forms – Cars ABC Ltd. / ABC Autos Ltée.

Item 2: The province or territory in Canada where the registered office is situated

Indicate the province or territory in Canada where your registered office is to be situated.

Note

Do not include the street address here. The street address will be indicated on Form 2 – Initial Registered Office Address and First Board of Directors.

Item 3: The classes and any maximum number of shares that the corporation is authorized to issue

Indicate the class or classes of shares that the corporation is authorized to issue. For each class, you may indicate a maximum limit for the number of shares to be issued or indicate that the class is unlimited.

Note

Unless you specifically limit the number of shares that can be issued, the number of shares the corporation is authorized to issue is unlimited.

If there is to be more than one class of shares, you need to indicate the rights, privileges, restrictions and conditions that apply to that class. At least one class of shares must have:

  • the right to vote
  • the right to receive dividends
  • the right to receive the remaining property of the corporation on dissolution.

The three rights don't have to be attached to the same class (e.g., class A can have the right to vote while class B has the right to dividends and the remaining property). However, it there is only one class of shares, all three rights apply to it.

The following clauses are only examples of the most common kinds of share structures used by many incorporators. They are by no means mandatory or exhaustive. You may wish to seek legal advice if you want to use other clauses to be sure that they are permitted under the CBCA.

Examples:

Single class of shares:

"The corporation is authorized to issue an unlimited number of shares of one class."

or

"Unlimited number of shares in a single class."

Two or more classes of shares:

"The corporation is authorized to issue an unlimited number of Class A and Class B shares. The Class A shareholders shall be entitled to vote at all shareholder meetings, except meetings at which only holders of a specified class of share entitle their holders to vote and to receive such dividend as the board of directors in their discretion shall declare. Subject to the provisions of the Canada Business Corporations Act, the Class B shares shall be non-voting. Upon liquidation or dissolution, the holders of Class A and Class B shares shall share equally the remaining property of the corporation."

or

"The corporation is authorized to issue Class A and Class B shares with the following rights, privileges, restrictions and conditions:

  1. Class A shares, without nominal or par value, the holders of which are entitled:
    1. to vote at all meetings of shareholders except meetings at which only holders of a specified class of shares are entitled to vote; and
    2. to receive the remaining property of the corporation upon dissolution.
  2. Class B shares, without nominal or par value, the holders of which are entitled:
    1. to a dividend as fixed by the board of directors;
    2. upon the dissolution or liquidation of the corporation, to repayment of the amount paid for such share (plus any declared and unpaid dividends) in priority to the Class A shares, but they shall not confer a right to any further participation in profits or assets.
  3. The holders of Class B shares shall not, subject to the provisions of the Canada Business Corporations Act, be entitled to vote at any meetings of shareholders."
Share redemption:

If a fixed price is not stated, a redemption formula that can be determined in dollars must be used.

"The said Class X shares or any part thereof shall be redeemable at the option of the corporation without the consent of the holders thereof (at a price of $space to insert amount per share) or (at a price equal to the amount paid per share) plus any declared and unpaid dividend."

Item 4: Restrictions, if any, on share transfers

No restrictions

If there are to be no restrictions, simply state "none".

Non-distributing corporations

Under provincial securities law a corporation that sells shares to the public is considered a reporting issuer. The CBCA calls them distributing corporations. These corporations are subject to a number of requirements under provincial securities law. Private issuers are exempt from these requirements.

In order to be a private issuer (i.e., not a reporting issuer) National Instrument 45-106 requires that the corporation's securities, excluding non-convertible debt securities, be:

  • subject to restrictions on transfer that are contained in the issuer's constating documents or security holders' agreements;
  • beneficially owned, directly or indirectly, by not more than 50 persons, not including employees and former employees of the issuer or its affiliates, provided that each person is counted as one beneficial owner unless the person is created or used solely to purchase or hold securities of the issuer in which case each beneficial owner or each beneficiary of the person, as the case may be, must be counted as a separate beneficial owner; and
  • distributed only to persons described in securities legislation or regulations (e.g., people at non-arm’s length with the corporation such as directors, officers, employees, family and friends).

It is suggested that to meet the first requirement (i.e., restriction the transfer of securities in constating documents), a provision restricting the transfer of shares should be in Item 4- Restrictions, if any, on share transfer of the articles. To meet the requirement for restrictions on the transfer of securities other than shares, a provision should be added to Item 8 – Other provisions, if any.

Example:

Item 4 - Restrictions, if any, on share transfers

"No shares of the capital of the corporation shall be transferred without either (a) the sanction of a majority of the directors of the corporation or alternatively (b) the sanction of the majority of the shareholders of the corporation."

Item 8 - Other provisions, if any

"The corporation's securities, other than non-convertible debt securities, shall not be transferred without either (a) the sanction of a majority of the directors of the corporation, or (b) the sanction of the majority of the shareholders of the corporation, or alternatively (c), if applicable, the restriction contained in security holders' agreements."

There are other exemptions in provincial securities legislation that prevent a corporation from becoming a "reporting issuer", and consequently being designated as "distributing corporation" under the CBCA. You may want to consult with legal counsel or other professional advisers to consider the impact of securities legislation on your corporation.

Constrained share corporations

Sometimes a corporation restricts the transfer of its shares to meet the requirements of another law. For example, some industries restrict the percentage of non-Canadians who own the shares of a corporation (i.e., limit the percentage of foreign ownership). In those cases it is necessary to constrain the transfer of shares to make sure that the corporation's shares are not owned by too many non-Canadians. When the limits are passed, the CBCA provides a mechanism to force the sale of shares to lower the percentage of non-Canadian shareholders.

Examples:

"No shares of the capital of the corporation shall be transferred without either (a) the sanction of a majority of the directors of the corporation or alternatively (b) the sanction of the majority of the shareholders of the corporation."

or

"No shares of the corporation shall be transferred without the approval of the directors evidenced by resolution of the board, provided that the approval of any transfer of shares may be given as aforesaid after the said transfer has been effected upon the records of the corporation, in which event, unless the said resolution stipulates otherwise, the said transfer shall be valid and take effect as from the date of its entry upon the books of the corporation."

Item 5: Minimum and maximum number of directors

Every corporation must have at least one director, except a distributing corporation. A distributing corporation must have no fewer than three directors. If a corporation is to have cumulative voting, the number of directors must be fixed.

Item 6: Restrictions, if any, on the business the corporation may carry on

Indicate any restrictions on the business that the corporation may carry on. If there are no restrictions required, indicate "none".

If, however, there are reasons why you wish to restrict the business of the corporation, the following preamble is suggested:

"The business of the corporation shall be limited to the following: ..."

Item 7 – Change of name and details of the incorporation

Indicate the relevant information in each section:

  1. If you change the corporate name as part of the continuance, state the full legal name of the body corporate. If there is no change in the name, mark “none” or leave the section blank.
  2. Indicate the details of incorporation, that is indicate the date of incorporation and the legislative authority under which it is presently incorporated.

Item 8: Other provisions, if any

Include any other provisions your corporation would like to have in its articles (e.g., any provisions required to satisfy the requirements of other legislation). If there are no other provisions, indicate "none".

While there is no limit to the provisions that could be part of this section of the articles, the following illustrates suggested wording for some possible topics. The suggested provisions are merely examples, i.e., the list is not definitive and the wording is not mandatory. If you want to use other provisions, you may wish to consult a lawyer or other business professional to be sure that they are permitted under the CBCA.

A. Restrictions on the transfer of securities other than shares

You may want a provision that restricts the transfer of the corporation's securities other than shares in order to comply with certain requirements of provincial securities law. See information provided at Item 4: Restrictions, if any, on Share Transfers.

B. Borrowing powers

The CBCA allows directors to borrow and grant security on property without the authorization of shareholders. However, your corporation can restrict this power by including a provision in the articles or by-laws or in any unanimous shareholders' agreement. A provision regarding directors' borrowing powers and the delegation of those powers is sometimes used to limit the authority of directors and/or to satisfy lending institutions. The following wording could be used in the articles:

"If authorized by a by-law which is duly adopted by the directors and confirmed by ordinary resolution of the shareholders, the directors of the corporation may from time to time:

  1. borrow money on the credit of the corporation;
  2. issue, reissue, sell, pledge or hypothecate debt obligations of the corporation; and
  3. mortgage, hypothecate, pledge or otherwise create a security interest in all or any property of the corporation, owned or subsequently acquired, to secure any debt obligation of the corporation.

Any such by-law may provide for the delegation of such powers by the directors to such officers or directors of the corporation to such extent and in such manner as may be set out in the by-law.

Nothing herein limits or restricts the borrowing of money by the corporation on bills of exchange or promissory notes made, drawn, accepted or endorsed by or on behalf of the corporation."

C. Cumulative voting for directors:

This clause is allowed only if the number of directors is a fixed number:

"There shall be cumulative voting for directors."

D. Increase the majority vote by shareholders:

The CBCA specifies that an ordinary resolution is a simple majority and a special resolution is a two-thirds majority. Your corporation can set out a different majority in its articles, which must be greater than the statutory majorities. The requirements for passage of a resolution to remove a director cannot be increased. The following wording could be used:

"In order to effect any (ordinary and/or special) resolution passed at a meeting of shareholders, a majority of not less than space to insert number per cent of the votes cast by the shareholders who voted in respect of that resolution shall be required."

E. Foreign corporate name

You may want to specify the foreign form of your corporate name. This form of the name may only be used outside Canada. The following wording could be used:

"It is hereby provided that the corporation may use and may be equally designated by the following form outside Canada: ...."

Note

Item 8 of Form 11 is not to be used to state the English or French form of your corporate name for use inside Canada. The English and/or French forms of your corporate name are set out in Item 1 of Form 11 – Articles of Continuance.

F. Fractional shares

Specify voting rights on fractional shares:

"A holder of a fractional share shall be entitled to exercise voting rights and to receive dividends in respect of said fractional share."

G. Pre-emptive rights

Specify that some shareholders have a pre-emptive right:

"It is hereby provided that no shares of a class of shares shall be issued unless the shares have first been offered to the shareholders holding shares of that class, and those shareholders have a pre-emptive right to acquire the offered shares in proportion to their holdings of the shares of that class, at such price and on such terms as those shares are to be offered to others."

H. Require directors to own shares

Under the CBCA, directors are not required to own shares of the corporation. However, where incorporators do wish to provide for directors to own shares, the following wording is normally used:

"No person otherwise qualified shall be elected or appointed as a director unless such person beneficially owns at least one share issued by the corporation."

I. Quorum for directors' meetings

You may specify a quorum of directors:

"The quorum for any meeting of the board of directors shall be space to insert quorum of directors."

J. Fill a vacancy on the board of directors

The CBCA allows a quorum of directors to fill a vacancy on the board of directors, but not a vacancy created by an increase in the number of directors or a failure to elect the minimum number of directors specified in the articles (see section 132 of the CBCA). Alternatively, the articles could specify that only the shareholders can fill a vacancy on the board of directors. If you want to restrict the ability of the board of directors to fill a vacancy, the following wording could be used in the articles:

"Any vacancy on the board of directors shall be filled by a vote of the shareholders."

K. Additional Directors

The CBCA permits the articles to provide the board of directors with the authority to appoint one or more additional directors between annual meetings, for a term expiring not later than the close of the next annual meeting of shareholders (see subsection 128(8) of the CBCA). This authority does not apply to filling a vacancy on the board. The number of appointed directors cannot exceed one-third (1/3) of all directors elected at the last annual meeting of shareholders. The following wording can be used in the articles to allow directors to appoint additional directors:

"The directors may appoint one or more directors, who shall hold office for a term expiring not later than the close of the next annual general meeting of shareholders, but the total number of directors so appointed may not exceed one-third of the number of directors elected at the previous annual general meeting of shareholders."

Item 9: Declaration

These articles must be signed by a director or an authorized officer of the corporation continuing into the CBCA.


Annex B

Instructions for completing Form 2 – Initial Registered Office Address and First Board of Directors

You are providing information required by the CBCA. Note that both the CBCA and the Privacy Act allow this information to be disclosed to the public. It will be stored in personal information bank number IC/PPU-049.

Item 1: Corporate name

Provide the name of your corporation as indicated in the articles of the corporation.

Item 2: Address of registered office

This is where you must keep your corporate records and where official documents will be served on the corporation. Choose an address where you will be sure to receive any documents that are sent there since, legally, they will be assumed to have been received by the corporation.

Caution

The registered office address, even if it is also a residential address, is corporate information that is public (see Public disclosure of corporate information) and will be published in the Corporations Canada online database.

Indicate the street name and number, city, province or territory, and postal code of the registered office.

Note

  • The registered office address cannot be a post office box.
  • The address must be within the province or territory as indicated in the articles of the corporation.

Item 3: Additional address

If you want annual return reminder notices and other general correspondence from Corporations Canada to be sent to a different mailing address, other than the registered office address, indicate it here. An additional address is really only useful if the corporation wants another organization, such as a law firm, to file documents on its behalf.

Note

You can also subscribe to receive Annual return reminder emails.

Item 4: Members of the board of directors

Directors must provide either a residential address or an address for service that is not their residential address. An address for service is an address where legal documents must be accepted by the director or someone on the director’s behalf.

Caution

The names and addresses of directors, even if the address of a director is also a residential address, are corporate information that is public (see Public disclosure of corporate information) and will be published in the Corporations Canada online database.

Indicate the first and last name, as well as the address of each member of the board of directors, including the date when the individual became a director.

Note

  • The address cannot be a post office box.
  • The number of directors must correspond with the minimum and maximum number, or fixed number, of directors indicated in the articles of the corporation.
  • At least 25 percent of the directors must be resident Canadians. However, some exceptions apply:
    • If the corporation has fewer than four directors, at least one of them must be a resident Canadian.
    • If the corporation is required by a federal act or regulations to meet specific requirements respecting Canadian participation or control (for example, corporations carrying on air transportation or telecommunications businesses), a majority (50 percent plus 1) of its directors must be resident Canadians

Item 5: Declaration

These articles must be signed by a director or an authorized officer of the corporation continuing into the CBCA.

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