Forming a Provincial or Federal Corporation in Canada? (2025)
Canada 
Updated on January 20 
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- 1. What is a Canadian Corporation?
- 2. Main characteristics of a joint stock company
- 3. State Corporation vs. Federal Corporation: Which is the Best Choice?
- 4. Procedures for establishing a provincial or federal corporation in Canada
- 5. How does GLA support businesses to open companies in Canada?
- 6. Frequently asked questions about Corporation type of company in Canada
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Foreign businesses can choose to open a provincial corporation or a federal corporation in Canada. So which option is best for foreign investors?
The following article from GLA's Canadian investment consultants with over 10 years of experience will provide a detailed guide comparing the pros and cons of provincial and federal corporations and at the same time clarify the process of establishing a joint stock company.
The information in this article helps businesses choose the most suitable form to Register to open a company in Canada.
1. What is a Canadian Corporation?
According to the Canadian Corporation Code (Canada Business Corporations Act (RSC, 1985)), a corporation (“CCP”) in Canada is a separate legal entity created through registration with a provincial or federal authority.
In Canada, businesses can choose to open a provincial corporation or a federal corporation.
This is one of the most popular types of businesses in Canada, suitable for companies ranging from small to large corporations wishing to do business in this market.
Joint stock companies have clear and flexible legal characteristics, helping to protect shareholders' rights and facilitate capital mobilization.
2. Main characteristics of a joint stock company
- Separate legal entity: A joint stock company has independent legal status, meaning it can own assets, enter into contracts, and engage in business activities in its own name independent of its shareholders.
- Limited: Shareholders of a company are only liable for the debts and financial obligations of the company to the extent of the capital they have invested. This means that the personal assets of shareholders are not affected by the debts of the company.
- Easy to raise capital: Joint stock companies can issue shares to raise capital from investors. This makes it easier for the company to expand its business and strengthen its finances.
- Transfer of shares: Shareholders can easily sell or transfer their shares without having to dissolve the company. This gives investors flexibility in raising capital legally.
3. State Corporation vs. Federal Corporation: Which is the Best Choice?
In Canada, there are two main types of company formation: provincial and federal. Each form has its own characteristics that are suitable for different types of businesses.
The comparison table below will clarify the key differences between the two and explain why. The provincial form is more suitable for foreign enterprises than the federal form.
Acute Joint Stock Company (Provincial Corporation) | Federal Corporation (Federal corporation) | |
| Same | ||
| Scope of work | Can operate across Canada. Businesses opening a company need to pay attention to tax issues when doing business between states. | |
| Company opening capital | The minimum share capital is 1 Canadian dollar. The minimum capital requirement also depends on the business sector (tourism, real estate, manufacturing, finance, etc.) | |
| Area of operation | The company's headquarters (company address) is located in the province registered with the government. For federal companies, each company must register in at least 1 province to open a company office. Federal companies will be given priority to register additional operating licenses in other provinces. A Canadian corporation that wants to open a company in another state needs to register for an additional operating license in another province (Extra Provincial Registration). Foreign companies opening a branch office in Canada also need to register for an additional operating license in another province (Extra Provincial Registration). Registration can be simplified if the provinces and territories in Canada have a common agreement with each other. For example, the NWPTA between British Columbia, Alberta, Manitoba and Saskatchewan allows for a simplified registration process when registering an interprovincial corporation. | |
| Company name | The company name can be in 2 formats
NUANS search is a requirement when registering a company. This is an activity to check the company name in the Canadian government system to determine the most suitable company name, avoiding duplication. | |
| License | Some professions in Canada require special licensing from the federal or provincial government, such as the healthcare, technology, and financial and tourism industries. | |
| Cost of opening a company |
Foreigners and companies need to appoint a local agent in Canada to open a company. GLA will support the Business as a local agent. | |
Acute Joint Stock Company (Provincial Corporation) | Federal Corporation (Federal corporation) | |
| Different | ||
| Cost of opening a company | The cost of establishment and maintenance is lower than that of a federal corporation. | Higher costs due to more requirements to meet. (Check the statewide NUANS Search company name, and it requires a Canadian director.) |
| Director Requirements | Director residency requirements may vary by province. Provinces such as British Columbia, Alberta, Quebec, New Brunswick, Manitoba, Ontario There is no residency requirement for company directors. | Canada requires at least 1 director is a permanent resident of Canada. |
| Company name protection | Company names are only protected within the province, not nationwide. | Company name is protected throughout Canada. |
| Best for | Foreign individuals and companies wishing to open a company in Canada as some states allow 1% foreign ownership of the company and there are no residency requirements for directors. | A federal company is suitable for large corporations and multinational companies because a federal company has a reputation in the international market and its name is protected throughout Canada. |
4. Procedures for establishing a provincial or federal corporation in Canada
The process of establishing a joint stock company, regardless of whether the Enterprise chooses the provincial or federal level of company, will include the following 5 steps:
Company names must be checked against the federal database system to ensure no duplicates. Global Links Asia will assist Enterprises in performing Nuans Search to ensure valid company names.
Global Links Asia will assist businesses in preparing appropriate documents and information including:
- Company names in descending order;
- Charter capital for Canadian companies
- Company business description table
- Information about directors and executive shareholders
- Copy of Passport of director and shareholder valid for at least 6 months
- Proof of permanent address (e.g., ID card, driver's license, bank statement showing address, etc.)
- Canadian company address. Global Link Asia Consulting will provide
GLA will represent the company in dealing with government agencies. The application must be submitted to the government agency of the province where the business intends to operate.
GLA will work with government agencies, handling the issue of establishment until the company is successfully established and the application is approved.
After forming your company, you will need to register for a Business Number with the Canada Revenue Agency (CRA). This number will be used to manage your company's taxes, pension funds, and other legal obligations.
Depending on the business, a company may be required to register for a number of different taxes:
- Corporate income tax: The company must declare and pay income tax annually.
- Value Added Tax (GST/HST): If a company's revenue exceeds CAD 30.000/year, the company must register and pay GST/HST.
- Provincial Tax (PST): Some provinces have their own provincial taxes, for example in British Columbia, Manitoba, and Quebec.
In addition, companies with import-export activities and hiring employees will need to open additional import/export tax accounts and state-specific employee insurance reporting accounts.
A team of professional consultants will support businesses in opening corporate bank accounts with reputable partners:
- Open an online bank account with a reputable digital bank, recognized in the US and Singapore: fast, efficient, low cost.
- Open a physical bank account with Royal Bank of Canada, TD Bank, Montreal Bank
5. How does GLA support businesses to open companies in Canada?
Global Links Asia, with experience in consulting, supporting the establishment of companies in Canada for hundreds of companies and supporting effective operations, working with the government, will support businesses:
- Canadian state consulting tailored to your company needs to open a company.
- Consulting on suitable company types, helping businesses optimize business operations.
- Assisting Canadian companies in complying with laws and annual requirements in a legal, accurate and efficient manner.
- Tax and accounting services and financial reporting according to Canadian standards.
- Register to open and verify a physical bank account in Canada or an account with a reputable digital bank in the US, Singapore, Hong Kong.
6. Frequently asked questions about Corporation type of company in Canada
1. What are the benefits of a corporation in Canada?
A joint stock company has a separate legal entity, protects the personal assets of shareholders, and easily raises capital from investors through the issuance of shares. This type is also suitable for foreign shareholders.
2. Can an individual form a company without residing in Canada?
Yes, but the company must have at least one resident director in Canada for federal or state corporations. Resident director requirements may vary by province for provincial corporations.
3. How long does it take to set up a company in Canada?
Provincial company formation usually takes about 5-10 days or longer, while federal company formation can take 2-4 weeks due to more thorough vetting and verification process.
Processing time depends on Canadian government administrative processing time and the time to prepare accurate and complete documents between GLA and the customer.
4. What is the core difference between a provincial company and a federal company?
Federal corporations have much better protection for their corporate names than state corporations, and the process of registering a corporation in other states is more favorable.
Highlights- Provincial companies are more suitable for foreign businesses. Federal companies are suitable for large corporations and multinational companies.
- States such as British Columbia, Alberta, Quebec, New Brunswick, Manitoba, Ontario allow foreigners to open companies with 100% ownership and do not require directors to be resident in Canada.
- Global Links Asia will support businesses to open a company in Canada in a complete package, without hidden costs, quickly and effectively.
- Joint stock companies can choose to open a bank account with a physical bank in Canada or with a reputable licensed digital bank in the US, Hong Kong, Singapore.
This article was published by GLA on 06/09/2021. Copyright and accompanying content are intellectual property of GLA. All rights reserved.
The guidance and content are for general information only and are not intended to provide specific guidance and advice on accounting, tax, legal or other professional advice. Readers should consult professional advisors on specific issues.
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