Investor Presentaiton
CORPORATE LAW
BY ALAIN RANGER
BRAZIL - CANADA COMPARATIVE LAW
Types of entities and tax system in
Canada
1. Types of Entities
Several different vehicles are available in Canada for conducting a
business. Foreign businesses can operate directly through a branch
office or establish a separate Canadian vehicle. Corporations are
the most common business entity, but sole proprietorships and
partnerships can also be used to accomplish similar objectives.
Joint ventures, franchises and cooperatives are less common, but
appropriate for some types of enterprise.
1.1 Corporate Entities
(A) Canadian Corporations
A corporation is an entity with legal status independent of its shareholders.
Corporations utilized by foreign investors are usually created by
incorporation under the Canada Business Corporations Act ("CBCA") or
under similar provincial laws.
A corporation can be incorporated by individuals or other corporations.
Both federal and provincial corporations are created by filing articles of
incorporation with the appropriate government authorities. The process
is quick (24 hours) and there is no minimum capital required. The articles
must include details of the rights, restrictions, privileges and conditions
attached to each class of shares.
A federal corporation's articles must also name the first directors, a
minimum of 25% of whom must be Canadian residents. While the directors
generally exercise management authority on behalf of the shareholders,
their power can be restricted through a unanimousshareholder agreement.
The corporation, its shareholders or third parties can hold the directors
personally liable for certain aspects of their decisions.
Provincial incorporation can also be used. The provincial acts
governing corporations vary somewhat, and, while many of their
provisions are similar to those of the CBCA, there are a number of
differences in some of the provinces, including no requirement for a
minimum Canadian resident director.
Corporations are taxable entities under the Canadian taxation system on
their worldwide income.
(B) Unlimited Liability Companies
The provinces of Alberta, British Columbia and Nova Scotia allow for
the incorporation of an "unlimited liability company" as the Canadian
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