Glossary for the Canada Business Corporations Act (CBCA)Reader Rating: 5.00Star

A

Affiliate
Two corporations are related to, or associated or affiliated with, each other in the following situations:
  • an affiliate is a corporation that is a subsidiary of another corporation;
  • if a corporation has two subsidiary corporations, the two subsidiaries are affiliates of each other; or
  • if two corporations are controlled by the same person, the two corporations are also affiliates of each other.
Amalgamation
A transaction in which two or more corporations merge to form one corporation.
Amendment
A change made to the provisions set out in a corporation's articles (e.g., the corporate name, the number of directors, and the province in which the corporation's registered office is located).
Anniversary Date
The anniversary date is the date a federal corporation was created (e.g., date of incorporation or amalgamation) or continued under the CBCA.
Annual Meeting
An annual meeting is a meeting of shareholders which is required to be held each year to consider financial statements and the auditor's report, elect directors and appoint auditors.
Annual Return
A document (commonly called Form 22) that includes information about a corporation that must be filed within 60 days of the corporation's anniversary date. This form should not be confused with annual financial statements or annual reports.
Arrangement
An arrangement is a transaction authorized by the CBCA that allows a court to supervise a fundamental change to one or more corporations that is not possible to complete under any other provision of the statute.
Articles
Original or restated Articles of Incorporation, Articles of Amendment, Articles of Amalgamation, Articles of Continuance, Articles of Reorganization, Articles of Arrangement, Articles of Dissolution or Articles of Revival, including any amendments.
Articles of Incorporation
A legal document with clauses that govern an incorporated business. To incorporate under the CBCA, a person must correctly complete the Articles of Incorporation and the Initial Registered Office Address and First Board of Directors form and must file the forms with Corporations Canada. The Articles of Incorporation, when filed, create the corporation and set out important matters such as the number of directors and types of shares the corporation will have.
Auto-returned applications
Auto-returned applications refer to online applications for which a certificate is issued automatically, without an examination of the articles. Instead, the articles are validated by the electronic system. The articles must consist solely of provisions that either do not need to be approved or that have already been approved by Corporations Canada.
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B

Bankrupt
A person (individual or corporation) who has made an assignment into bankruptcy under the Bankruptcy and Insolvency Act (BIA), or against whom a bankruptcy order has been made under the BIA, and who has not been discharged from bankruptcy.
Beneficial Owner
A person who has the rights of a shareholder although their name is not on the share certificate or is not listed in the register of shareholders.
Body corporate
The terms “body corporate” and “corporation” mean the same in that both are entities created by statute as legal persons with rights and obligations. However, “body corporate” is used in the laws administered by Corporations Canada to mean a corporation created by a corporate law other than one administered by Corporations Canada.
Business Number
The Business Number (BN) is part of a unique federal government numbering system that identifies a corporation and the accounts it maintains with the Canada Revenue Agency (CRA). It is composed of a 9-digit registration number that identifies the corporation and a 6-character account identifier. It is assigned by CRA.
By-Laws
Basically, the agreement between the corporation and its shareholders setting out the internal rules by which the corporation will function. These often deal with matters such as meetings of directors and shareholders.
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C

CBCA
The Canada Business Corporations Act. This is the statute that governs federally incorporated business, not including banks, insurance and trust and loans companies.
Certificate
A certificate is a document issued by Corporations Canada to effect a transaction (e.g., an incorporation, amalgamation or amendment to articles).
Constating Documents
The documents which establish or create a corporation. For the CBCA, the constating documents are the certificate and articles of the corporation (e.g., articles of incorporation, continuance or amalgamation)
Corporate Name
The corporate name is the legal name of a corporation. It is set out in the articles of a corporation and can only be changed by an amendment to articles.
Corporation Number
A corporation number is the number assigned to a federal corporation by Corporations Canada. It is usually a 7-digit number.
Corporations Canada
The branch of Industry Canada, a department of the Government of Canada, that administers the CBCA. To incorporate a business, you file Articles of Incorporation with Corporations Canada.
Corporation Key
An eight-digit access code provided by Corporations Canada that must be used to file certain request online - such as making changes to the registered office address and director information.
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D

Director
An individual elected by the shareholder(s) to supervise the management of a corporation. Together, all directors of a corporation are referred to as the "board of directors". All federal corporations are required to have one or more directors, 25% of whom must be resident Canadians.
Director Appointed under the CBCA
The individual appointed by the federal Minister of Industry under the provisions of the CBCA to independently administer the statute.
Dissent Rights
The right of shareholders to receive a cash payment for the fair value of their shares when they have dissented from a shareholder vote to approve certain fundamental corporate transactions (e.g., amalgamation, continuance).
Dissolution
The act of ending the existence of a corporation, under certain circumstances, by filing the required documents with Corporations Canada. A corporation could also be dissolved by the Director under the CBCA for failure to comply with the legislation.
Distributing Corporation
A corporation that:
  • is a reporting issuer within the meaning of any applicable securities legislation, unless it is subject to an exemption from that legislation or
  • is not a reporting issuer but
    • has filed a prospectus or similar document in relation to the public distribution of its shares
    • has securities that are listed and posted for trading on a stock exchange in or outside Canada or
    • is a distributing corporation that is involved in or results from a statutory procedure, such as an amalgamation or reorganization
Dividend
The share of profit payable to shareholders on their shares.
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F

Federal Incorporation
Incorporation under the CBCA rather than under a provincial or territorial statute.
Fundamental Change
A fundamental change is a major change to an existing corporation (e.g., a change to its articles of incorporation) or a corporate reorganization that results in a different entity being created. For example, when two corporations amalgamate (i.e., join to become one entity), a new corporation is created that retains all of the property, assets, liabilities and responsibilities of the individual corporations.
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G

Governing Legislation
Governing legislation is the act under which a federal corporation currently exists.
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I

Incorporation
The act of establishing a corporation by filing the required documents.
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L

Legal element
A legal element is the part of a corporate name that helps the public identify an organization as an incorporated business with limited liability. Under the CBCA, every corporate name must include one of the following legal elements: Limited, Limitée, Incorporated, Incorporée, Corporation, Société par actions de régime fédéral, Ltd., Ltée, Inc., Corp., and S.A.R.F.
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N

Non-distributing Corporation
A corporation that is not a distributing corporation; for example, it does not issue shares to the public. Such a corporation is commonly referred to as "private corporation".
NUANS Name Search Report
A document that includes a list of business names and trade-marks that sounds similar to the name being proposed. The list is drawn from NUANS, the national data bank of existing and reserved business names as well as trade-marks registered and applied for in Canada.
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O

Officer
An individual appointed by the director(s) of a corporation to manage the day-to-day business of a corporation, such as president, vice president, secretary, treasurer, etc. The position of officer is distinct from that of director (see above), although in a small corporation one individual very often occupies both positions.
Online Filing Centre
The fastest, most convenient and least expensive method of filing documents with Corporations Canada to incorporate a business federally. You can access the Online Filing Centre through the home page of Corporations Canada's website.
Ordinary Resolution
An ordinary resolution means a resolution passed by a simple majority (i.e., 50% plus 1) of the votes cast at a meeting.
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P

Personal information bank
In order to manage information under the terms of the Privacy Act and the Access to Information Act, the federal government puts personal information into collections or groupings called banks that are managed by Info Source, a government agency. This system allows the government to easily determine which parts of the personal information it has collected can be released.
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Q

Qualifications of directors
The Canada Business Corporations Act requires all directors to:
  • be at least 18 years old
  • not have been declared incapable by a court in Canada or in another country
  • be an individual (i.e., a corporation cannot be a director)
  • not be in bankrupt status.
Quorum
The stated minimum number of people entitled to attend a meeting who must be present for business to be conducted. Corporate by-laws may specify the minimum number of directors who must be present at a meeting of the board of directors, or the minimum number of shareholders who must be present at a shareholders' meeting; if the by-laws do not, the quorums set out in the CBCA must be respected.
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R

Registered office
The registered office is the legal address of a corporation. The CBCA requires that official documents always be sent to a corporation's registered office.
Residential address or other address for service
An address for service is an address where legal documents must be accepted by the director or someone on their behalf, and where an acknowledgement or delivery receipt can be provided, if required. An address for service can be the residential address of the director or a business address.
Resolution
The meaning of the term "resolution" depends on the context. It can mean:
  • a written record of decisions taken in lieu of an organizational meeting;
  • a decision made at an annual or special meeting based on the required number of votes in favour by shareholders entitled to vote; or
  • a document signed by all shareholders in lieu of a meeting of shareholders.
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S

Security agreement
A document where property or other assets are given or pledged to guarantee the fulfillment of an obligation. For example, a mortgage on a building is given as security for a loan.
Share
A measure of ownership of a corporation. Some people refer to the share certificate as a stock. Shares are distinguished from securities, which are any type of investment instrument, including shares.
Shareholder
An owner in a corporation; a person holding shares in a corporation. Because shareholders must conduct or approve many corporate activities such as electing directors, an active corporation must have at least one shareholder.
Special Resolution
A special resolution is a resolution that is passed by at least two-thirds of the votes cast at a meeting.
Statutory Declaration
A written statement that is declared to be true in the presence of a qualified official who has the authority to administer an oath or solemn declaration (e.g., a commissioner for oaths, notary public, lawyer, etc.).
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W

Written resolution in lieu of a meeting
A written resolution in lieu of a meeting is a document signed by all of the shareholders of a corporation in lieu of a meeting of the shareholders. It can be a practical way for small corporations with only one or a few shareholders to meet the statutory requirement of holding an annual meeting. The resolution must deal with all of the things that would otherwise be considered at the annual meeting of shareholders (e.g., consideration of the financial statements and the auditor's report, the election of directors, the appointment of the auditor and any other relevant business). A copy of the resolution must be kept with the corporate records.

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