What is a Certificate of Incorporation and why does it matter for a new corporation? A Certificate of Incorporation is the government document confirming that a corporation legally exists.
This guide explains how a corporation comes into existence and what the Certificate of Incorporation actually represents. It also covers how the certificate differs between Ontario and federal incorporation.
Key Takeaways
- A Certificate of Incorporation is government confirmation that a corporation has been legally created.
- Incorporation in Canada happens in two steps: government approval, then organizational resolutions.
- The Certificate of Incorporation only completes step one. Step two is still required to fully organize the corporation.
- An Ontario Certificate of Incorporation is issued by Service Ontario as part of the Articles of Incorporation.
- A federal Certificate of Incorporation is issued by Corporations Canada, also as part of the Articles of Incorporation.
- Both certificates show the incorporation date, a unique corporate number, and the corporation's full legal name.
This guide draws on more than ten years of experience advising founders through the incorporation process in Ontario.
How a Corporation Comes Into Existence
A corporation is a separate legal entity. That is a simple statement, but it raises a practical question. How does this separate legal entity actually come into existence?
In Canada, it helps to think of a corporation's creation as a two-step process.
In Canada, business corporations fall under shared federal and provincial jurisdiction. This means a founder can choose to incorporate under provincial law, such as Ontario's Business Corporations Act.
The alternative is the federal Canada Business Corporations Act. The two-step process described below applies either way, though the government office involved differs.
Step one is government approval. An application is filed with either the federal or provincial government. In Ontario, this means submitting a Form 1 to the Ministry of Government and Consumer Services. If the Form 1 is in order, the government issues approval.
Step two is internal organization. The corporation adopts its first shareholders' and directors' resolutions. These resolutions elect directors, appoint officers, and issue shares to shareholders.
Step one and step two are closely connected in practice. There is a general expectation that step two follows immediately after step one is complete.
What Does a Certificate of Incorporation Actually Represent?
The Certificate of Incorporation represents the completion of step one, government approval. It does not represent the completion of step two.
In other words, receiving a Certificate of Incorporation confirms that a corporation legally exists as a separate entity. It does not mean the corporation has elected directors, appointed officers, or issued shares. Those actions still require the organizational resolutions in step two.
This distinction is where most of the confusion around Certificates of Incorporation comes from. The certificate is proof of legal existence, not proof that the corporation is fully organized and ready to operate.
Certificate of Incorporation by Jurisdiction
Ontario Corporations
A business incorporating provincially in Ontario works with Service Ontario.
The incorporator completes the government's Form 1 in duplicate, with original signatures on both copies. Form 1 is issued under the regulations to the Ontario Business Corporations Act.
The incorporator also obtains an Ontario-biased NUANS name search report and submits it along with the Form 1.
If the documentation is in order, the government issues the corporation's Articles of Incorporation. The Articles of Incorporation include the Certificate of Incorporation. This certificate confirms that the provincial government has approved the application.
An Ontario Certificate of Incorporation shows three key details:
- The date of incorporation
- The corporation's Ontario Corporate Number (OCN)
- The corporation's complete legal name
Federal Corporations
A business that incorporates federally receives its documentation from Corporations Canada. This is a division of Innovation, Science and Economic Development Canada.
The incorporator files the application and NUANS report. Assuming nothing is amiss, the business then receives its Federal Articles of Incorporation.
The Federal Articles of Incorporation include four documents:
- A Corporate Information Sheet
- The Certificate of Incorporation
- Form 1
- Form 2
The Federal Certificate of Incorporation shows the same core details as the Ontario version. It includes the date of incorporation, a uniquely assigned corporation number, and the corporation's full legal name.
Why the Certificate of Incorporation Is Not the Final Step
Getting the Certificate of Incorporation feels like the finish line, but it is only the halfway point.
After receiving the certificate, the corporation still needs to complete step two. This means drafting and adopting the first shareholders' and directors' resolutions.
Without step two, the corporation has no elected directors, no appointed officers, and no issued shares. A corporation in this state is not properly organized, even though it legally exists on paper.
Skipping step two creates real problems. Directors cannot validly act on behalf of the corporation, and contracts may be difficult to enforce. The corporation's ownership structure also remains undefined. This is why the certificate should always be treated as a milestone, not the end of the process.
Why the Certificate of Incorporation Matters in Practice
The Certificate of Incorporation is not just a formality. It becomes a working document that the corporation uses regularly.
Banks generally require a copy of the Certificate of Incorporation before opening a corporate bank account. Landlords, suppliers, and licensing bodies may also request it to confirm the corporation exists before signing agreements.
Government bodies and regulators sometimes require the certificate as proof of incorporation. This often comes up when a corporation applies for permits, licenses, or industry-specific registrations. Investors and lenders may ask for it during due diligence as well.
Because the certificate gets requested so often, it is worth keeping the original in a secure, easily accessible location. Keep it together with the full Articles of Incorporation. Many corporations keep these documents in a minute book alongside their organizational resolutions.
Certificate of Incorporation vs. Certificate of Status
Founders sometimes confuse the Certificate of Incorporation with a Certificate of Status. This document is also called a Certificate of Compliance or Certificate of Good Standing. These are two different documents that serve different purposes.
The Certificate of Incorporation is issued once, at the moment the corporation is created. It never changes and does not expire.
A Certificate of Status, by contrast, can be requested at any time after incorporation. It confirms that a corporation currently exists and is in good standing, meaning its required annual returns are filed.
Banks, landlords, and other parties sometimes ask for a Certificate of Status, rather than a Certificate of Incorporation. This is common for a corporation that has been operating for several years. Knowing which document is being requested can save time and avoid unnecessary back-and-forth.
The Bottom Line
Questions about the Certificate of Incorporation come up often, and the confusion is understandable given how the term gets used. The certificate represents the completion of step one, government approval of the corporation's existence.
Step two, the organizational resolutions, still needs to happen afterward. A corporation is not fully organized until both steps are complete.
If you are incorporating a new business in Ontario or federally, our team at Levine Law can guide you through both steps. We can help you file the correct application and prepare the organizational resolutions your corporation needs.
Frequently Asked Questions
What is a Certificate of Incorporation?
A Certificate of Incorporation is a government document confirming that a corporation has been legally created. It is issued as part of the Articles of Incorporation.
Does a Certificate of Incorporation mean the corporation is fully set up?
No. The certificate confirms legal existence only. The corporation still needs organizational resolutions to elect directors, appoint officers, and issue shares.
Who issues the Certificate of Incorporation in Ontario?
Service Ontario issues it on behalf of the Ministry of Government and Consumer Services, as part of the Articles of Incorporation.
Who issues the Certificate of Incorporation for federal corporations?
Corporations Canada issues it, as part of the Federal Articles of Incorporation.
What information appears on a Certificate of Incorporation?
It shows the date of incorporation, a unique corporate number, and the corporation's complete legal name.
What happens if a corporation skips the second step after incorporation?
The corporation has no elected directors, appointed officers, or issued shares. This can create legal and practical problems down the road.
Is the Certificate of Incorporation the same as the Articles of Incorporation?
No. The Certificate of Incorporation is one document included within the broader Articles of Incorporation package.
Do I need a NUANS report to get a Certificate of Incorporation?
Yes. Both Ontario and federal incorporation require a NUANS name search report as part of the application.
Is a Certificate of Incorporation the same as a Certificate of Status
No. The Certificate of Incorporation is issued once at creation and never changes. A Certificate of Status confirms current good standing and can be requested any time after.
Where should I keep my Certificate of Incorporation?
Keep the original with your full Articles of Incorporation and organizational resolutions. These are typically stored in the corporation's minute book, since banks and other parties will request them.