Articles Of Incorporation Close Corporation Template for Canada

When you're establishing a close corporation in Canada, the Articles of Incorporation Close Corporation serves as your company's constitutional foundation. This critical legal document formally brings your corporation into existence while establishing the specific restrictions and provisions that define a close corporation structure under Canadian law.

When do you need this document?

You'll need Articles of Incorporation Close Corporation when starting a business where you want to limit share ownership to a small group of people, typically family members, business partners, or key employees. This structure is particularly valuable for family businesses seeking to keep ownership within the family, professional practices like law or medical firms, or small technology startups where founders want to maintain control. Unlike public corporations, close corporations can restrict who can purchase shares and often include right of first refusal provisions that give existing shareholders priority when shares are sold.

Key legal considerations

Your articles must include specific provisions that distinguish your corporation as a close corporation. Share transfer restrictions are mandatory and typically include pre-emptive rights, giving existing shareholders the first opportunity to purchase shares before they're offered to outsiders. You'll need to specify the maximum number of shareholders, usually limited to 50 under Canadian law. The share structure section must detail authorized share classes, voting rights, and any special rights or restrictions. Directors' provisions should address minimum and maximum numbers, qualifications, and potential restrictions on who can serve. Business restriction clauses may limit the types of activities your corporation can engage in, which is common in professional corporations.

Legal requirements in Canada

Under the Canada Business Corporations Act (CBCA), your articles must be filed with Corporations Canada for federal incorporation, or with the appropriate provincial registrar if incorporating provincially. The corporate name must be unique and comply with naming requirements, including French language requirements in certain provinces. Your registered office address must be in Canada, and you'll need at least one Canadian resident director if you have more than one director. The articles must specify authorized share capital and any restrictions on business activities. Income Tax Act considerations are crucial, as close corporations may qualify for Canadian Controlled Private Corporation (CCPC) status, providing significant tax advantages including the small business deduction. Provincial securities legislation may also apply depending on your share structure and offering exemptions you plan to use.