Company formation in Nova Scotia

Incorporation for non-residents of Canada

Most Canadian provinces have residency restrictions for the board of directors; however there are provinces in Canada which do not have residency restrictions. Some of those provinces are Nova Scotia, British Columbia and New Brunswick.

Companies incorporated in any of those provinces can then be registered to do business in other provinces as well.

Language

The official and spoken languages are English and French.

Currency

The Canadian Dollar (also referred to as the “loonie”), which is freely exchangeable. All Financial Institutions and businesses also operate and accept the US Dollar.

Exchange control

None.

Type of law

Common Law, based on English Common Law.

Principal corporate legislation

  • The Companies Acts 1931 to 1993.
  • Limited Liability Companies Act 1996.

Types of corporations for International Trade and Investment

There are different types of corporations for tax purposes. The corporation type determines whether or not the corporation is entitled to certain rates and tax deductions.

Private Corporation

There are different types of corporations for tax purposes. The corporation type determines whether or not the corporation is entitled to certain rates and tax deductions.

Canadian-Controlled Private Corporation (CCPC)

A CCPC is a private corporation that is also a Canadian corporation. For a corporation to be considered a CCPC, it has to meet all of the following requirements at the end of the tax year: it is a private corporation; it is a corporation that is resident in Canada and was either incorporated in Canada or resident in Canada from June 18, 1971 to the end of the tax year; it is not controlled directly or indirectly by one or more non-resident persons; it is not controlled directly or indirectly by one or more public corporations (other than a prescribed venture capital corporation, as defined in the Income Tax Regulations 6700); it is not controlled by a Canadian resident corporation that lists its shares on a prescribed stock exchange outside of Canada; it is not controlled directly or indirectly by any combination of persons described in the three preceding conditions; if all of its shares that are owned by a non-resident person, by a public corporation (other than a prescribed venture capital corporation), or by a corporation with a class of shares listed on a prescribed stock exchange were owned by one person, that person would not own sufficient shares to control the corporation; and no class of its shares of capital stock is listed on a prescribed stock exchange.

Other Private Corporations

These are generally corporations resident in Canada that are controlled directly or indirectly by non-residents. To be considered other private corporation, the corporation has to meet all of the following requirements at the end of the tax year: it is resident in Canada; it is not a public corporation; it is not controlled by one or more public corporations; it is not controlled by one or more prescribed federal Crown corporations (as defined in Regulation 7100); and it is not controlled by any combination of corporations described in the two preceding conditions.

Public Corporation

To be a public corporation, a corporation must be resident in Canada and meet either of the following requirements at the end of the tax year: it has a class of shares listed on a prescribed Canadian stock exchange; or it has elected, or the Minister of National Revenue has designated it, to be a public corporation and the corporation has complied with prescribed conditions under Income Tax Regulations 4800: on the number of its shareholders, the dispersing of the ownership of its shares, the public trading of its shares, and the size of the corporation. If a public corporation has complied with certain prescribed conditions under Regulation 4800, it can elect, or the Minister of National Revenue can designate it, not to be a public corporation. A public corporation that elects or is designated not to be a public corporation becomes a private corporation.

Corporation Controlled by a Public Corporation

This is a corporation that is controlled by a Canadian public corporation. If a corporation is a Canadian subsidiary of a public corporation, it does not qualify as public corporations for the purpose of determining the type of corporation.

Other Corporations

These include non-resident-owned investment corporations and Crown corporations. Most business enterprises in Canada are corporations incorporated under federal, provincial or territorial corporate legislation. Provincial and territorial legislation is largely consistent with the federal Canada Business Corporations Act, R.S.C. 1985, c. C-44 (the “CBCA”).

Corporate legislation and common law impose on directors the duty to manage the business and affairs of the corporation. Corporate legislation further provides that in exercising the duty to manage the business and affairs of the corporation, the directors are under a fiduciary duty to act honestly and in good faith with a view to the best interests of the corporation. In carrying out these duties, directors are obligated to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Investors can apply to a court for compensation in the event of “oppressive” action by their corporation.

Legislation governing the formation and operation of other forms of business enterprise, such as partnerships and trusts, is less extensive. Trustees have fiduciary responsibilities to trust beneficiaries. Most other aspects of the corporate governance of a non-corporate enterprise will be governed by the agreement or indenture under which the enterprise was established.

Company information

Procedure to incorporate

Submission of Memorandum and Articles of Association, nominating the first directors and secretary, and advise of the situation of the Registered Office and the form giving name approval.

Restrictions on trading

Canadian Corporations are not allowed to:

  • Undertake banking or insurance activities without a license.
  • Undertake investment business other than the investment of the company’s own assets activities without a license.
  • Solicit funds from the public nor offer their shares or membership to the public activities without a license.

Powers of company

A Canada Corporation has all the powers of a natural person.

Language of legislation and corporate documents

English, French (optional in Federal Corporations and compulsory in Quebec).

Registered office required

Canadian Corporations must maintain a registered office in Canada.

Shelf companies available

Yes.

Time to incorporate

Two days, subject to name approval.

Name restrictions

A name that is similar to or identical to an existing company. A name that is known to exist elsewhere. A name that implies illegal activities. A name that implies royal or government patronage.

Many names require justification or high capitalisation to allow use. Words such as “International”, “European” or other words indicating an international presence will only be approved if the Company is incorporated worldwide and has the ability to prove that this is the case. The same applies for “Canada”. Use of the word “Group” will only be approved if the company can provide documentary evidence that the company owns a group of companies. Numbered Companies are also acceptable, e.g. 012345BC Ltd.

Language of name

Names can be expressed in any language using the Latin alphabet, if the Registrar of Companies is in receipt of an English translation and the name is not considered undesirable.

Names requiring consent or license

The following names or their derivatives: bank, building society, savings, loans, insurance, assurance, reinsurance, co-operative, council, Chamber of Commerce, trust, municipal and finance or their foreign-language equivalents.

Suffixes to denote Limited Liability

Private Limited Companies must utilise Incorporation, Corporation, Limited, Inc., Corp. or Ltd as a suffix.

Compliance

Authorised and issued share capital

Canadian Corporations have a minimum authorised share capital of $1 or its currency equivalent, this being the maximum for the minimum capital duty payable upon incorporation. The minimum issued capital is one share of par value.

Classes of shares permitted

Canadian Corporations may have registered shares, preference shares, redeemable shares and shares with or without voting rights.

Financial statement required

There is a requirement to file audited financial statements with the authorities. Failure to maintain accounts or make them available for inspection at a company’s registered office is an offence punishable by imprisonment or a fine. The Canada Revenue Agency reserves the right to call in the financial records for inspection at any time.

Directors

The minimum number of directors is normally one (two are required in certain Provinces), they may be of any nationality or residence. Please note that some Provinces require a resident director. Bodies corporate may not be appointed as directors.

Company secretary

Canadian Corporations require a company secretary. The Company Secretary must be a natural person but may be of any nationality and reside anywhere in the world.

Shareholders/Members

The minimum number of shareholders is one.

Incorporation packages for non-residents

A minimum of one shareholder/officer is required.

There are no restrictions on the authorized or issued capital.

Shares are normally issued at no par value.

Most Canadian provinces have residency restrictions for the board of directors. We can provide incorporation services in provinces which do not have residency restrictions. Those provinces are Nova Scotia, British Columbia and New Brunswick.

Our Incorporation Packages are affordable and simple to use. The process is completed by email and/or phone consultation and all documents are couriered via international courier. The inclusions and costs are as follows:

Complete Incorporation Package (named corporation)
  • Registered Office.
  • NUANS Name Search (if required).
  • Completed Organizational Minutes, Share Certificates, Shareholders’, Directors’ & Officers’ Registers.
  • Corporate Minute Book including:
    • Corporate Seal.
    • Standard Corporate by-laws.
    • Registers & Ledgers.
    • Completion and Filing of Notification pursuant to the Investment Canada Act.
    • Registered Office Address for service of documents and mail forwarding purposes.

Corporate taxation

Nova Scotia corporate income tax rates apply to companies with business activities in Nova Scotia. The provincial corporate income tax is calculated on taxable income amount. The federal government defines the calculation of taxable income including net income, capital cost allowance and various tax deductions. Both federal and provincial corporate income taxes are collected through the annual tax return to the Canada Revenue Agency (CRA).

There are two corporate income tax rates in Nova Scotia:

  • The lower corporate income tax rate is 3.0 per cent (as of the 2014 tax year). This rate applies to taxable income earned in the province of Canadian-controlled private corporation up to the Nova Scotia business limit of $500,000. This rate is also known as the Small Business Rate and applies to all Canadian-controlled private corporation with limited taxable capital.
  • The higher rate of income tax is 16 percent. This rate applies to taxable income earned in Nova Scotia that does not qualify for the lower rate.

Tax credits

Companies may be eligible for various provincial tax credits that can reduce their income tax payable:

  • Innovation Equity Tax Credit (IETC)
  • Venture Capital Tax Credit (VCTC)
  • Capital Investment Tax Credit (CITC)
  • Film Tax Credit
  • Digital Media Tax Credit
  • Digital Animation Tax Credit
  • Research and Development Tax Credit
  • New Small Business Tax Deduction
  • Donations and Gifts
  • Foodbank Tax Credit for Farmers Guidelines
  • Credits issued under Film, Digital Media, Digital Animation, and Capital Investment Tax Credits

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