Between the certificate of incorporation and the first cheque from an investor, a Canadian startup accumulates a set of registrations, records and filings that are individually small and collectively decisive. This checklist follows a federal (CBCA) corporation from day one to that request, with the Ontario equivalents noted where they differ.

Day one: organize the corporation

Incorporation creates the corporation; organization makes it usable. At the first meeting of directors after incorporation, which may be held by written resolution, the directors may make by-laws, adopt forms of security certificates and corporate records, authorize the issue of securities, appoint officers, appoint an auditor to hold office until the first annual meeting, and make banking arrangements (CBCA s. 104).

Founder shares are issued by the directors at the time, to the persons and for the consideration they determine, subject to the articles and any unanimous shareholder agreement (s. 25(1)). A share may not be issued until the consideration is fully paid in money, or in property or past services that are not less in value than the money equivalent (s. 25(3)). A promissory note or a promise to pay does not count as property for this purpose (s. 25(5)).

Every issue and transfer goes into the securities register, which records for each class or series the names and latest addresses of all present and past holders in alphabetical order, the number of securities each holds, and the date and particulars of each issue and transfer (s. 50(1)).

Registrations: business number, GST/HST, payroll

A corporation needs a business number (BN), and a federal corporation gets one automatically: once the incorporation is approved the CRA issues the BN and the corporation income tax (RC) program account, with no separate registration (CRA, when you need a business number). The same page lists the provinces, including Ontario and British Columbia, whose incorporation process also delivers a BN and RC account. Other CRA accounts are added to that BN as needed: GST/HST (RT), payroll deductions (RP) and import-export (RM) (CRA, program accounts).

GST/HST registration is triggered by revenue, not by incorporation. A business is a small supplier, and need not register, while it does not exceed $30,000 in taxable supplies over four consecutive calendar quarters. If it exceeds $30,000 in a single calendar quarter it stops being a small supplier immediately and must register with an effective date no later than the supply that crossed the line. If it exceeds $30,000 over the previous four consecutive quarters without doing so in any single quarter, it stops being a small supplier at the end of the month following that quarter. In either case registration must be completed within 29 days of the effective date, and voluntary registration is available earlier (CRA, when to register).

A payroll (RP) account is needed before source deductions are remitted. The CRA's payroll pages set out what is needed to open the account, including the date employees receive their first wages, and the timing of the first remittance; check the current requirement there before the first payday (CRA, open a payroll account).

The corporation's T2 income tax return is due within six months after the end of each tax year, and the CRA notes that filing on time avoids penalties (CRA, when to file).

The minute book and the registers

The CBCA lists what must be kept at the registered office, or another place in Canada the directors designate: the articles and by-laws with all amendments and a copy of any unanimous shareholder agreement; minutes of meetings and resolutions of shareholders; copies of the notices of directors filed under sections 106 and 113; and the securities register (s. 20(1)). The corporation must also keep adequate accounting records and the minutes and resolutions of directors and committees (s. 20(2)).

The register of individuals with significant control belongs in the same book. Every CBCA corporation must keep it, refresh it at least once each financial year, and record new information within 15 days of becoming aware of it (s. 21.1); since January 22, 2024 the information is also filed with Corporations Canada with the annual return and within 15 days of any recorded change (s. 21.21).

Keep the annual cycle from the first year

Three federal deadlines recur. The annual meeting, or the written resolutions that replace it, must be held not later than 18 months after incorporation and thereafter not later than 15 months after the last one and no later than six months after the financial year end (s. 133(1)). The annual return and ISC filing are due within 60 days after the anniversary date, starting the year after incorporation (Corporations Canada, policy on annual filings). Any change among the directors, or in a director's address, must be reported within 15 days (s. 113(1)).

If the corporation carries on business in Ontario, the Corporations Information Act adds an initial return within 60 days and a notice of change within 15 days of any change (CIA ss. 3, 4).

SAFEs, shareholder agreements and the prospectus exemption

A first financing usually takes one of two forms: a priced round of shares, or a simple agreement for future equity (SAFE) or convertible note that converts later.

First, securities law. Shares, SAFEs and notes are all securities, and issuing them is a distribution that needs either a prospectus or an exemption. The exemption private companies rely on is the private issuer exemption in section 2.4 of National Instrument 45-106, which requires, among other things, that the issuer not be a reporting issuer or an investment fund, that its securities be subject to transfer restrictions in its constating documents or security holders' agreements, and that they be beneficially owned by not more than 50 persons excluding employees and former employees, and which limits purchasers to listed categories such as directors, officers, employees, founders and control persons, their close family, close personal friends and close business associates, existing security holders and accredited investors (OSC, NI 45-106). The transfer restriction is normally in the articles; check that it is there before the first outside investor. A distribution under the private issuer exemption does not itself require a report of exempt distribution: section 6.1 lists the exemptions that do, and section 2.4 is not among them (OSC consolidation current to October 5, 2018); have counsel confirm the current text before closing.

Second, the shareholder agreement. Under the CBCA an otherwise lawful written agreement among all the shareholders that restricts, in whole or in part, the powers of the directors to manage the business is valid as a unanimous shareholder agreement (s. 146). Shareholders who take on the directors' powers under it also take on the directors' duties and liabilities to the same extent, and a purchaser of shares who was not given notice of the agreement may rescind within 30 days of learning of it, which is why the share certificates must refer to it. Whether the founders' agreement should be a unanimous shareholder agreement is a decision to make with counsel before the first investor signs.

Third, the registers. Every closing produces entries in the securities register (s. 50), a review of the ISC register within 15 days (s. 21.1(3)) and, if any holder crosses 25% or an existing ISC changes, a filing with Corporations Canada within 15 days after the change is recorded (s. 21.21(1)(b)).

What an investor's counsel asks for

The diligence request for a seed round is a test of whether the foregoing was done. Expect to produce:

  • the articles, by-laws, all amendments and any shareholder agreement (s. 20(1));
  • the minutes and resolutions of shareholders and directors from organization onward, including each year's annual resolutions and audit waiver;
  • the securities register and a cap table that reconciles to it, with evidence that share consideration was paid (s. 25(3));
  • the ISC register and confirmation of the filings made with Corporations Canada (ss. 21.1, 21.21);
  • proof that annual returns have been filed and the corporation's status is active;
  • extra-provincial registrations in each province where the company does business, including the Ontario initial return and any notices of change;
  • CRA account numbers and evidence that T2, GST/HST and payroll filings are current;
  • the prior securities issued, with the exemption relied on for each; and
  • employment, contractor and intellectual-property assignment agreements for everyone who has written code or created assets for the company.

For federal and Ontario corporations, Misolla tracks these deadlines and prepares the filings for a lawyer's approval.

This article is general information, not legal advice; a lawyer must review your specific situation.