Starting a new business is complicated. There are so many important considerations along the way. Luckily BC has several fantastic business support organizations to help you get off to a successful start. The British Columbia Technology Industry Association (BCTIA) Centre4Growth is one such organization. Industry funded, the BCTIA is committed to growing British Columbia's technology industry. This week Dr. Peter Payne of the BCTIA generously shared his insights on incorporating your business in B.C.
We see a number of first-time entrepreneurs. These people are often skilled and creative engineers, programmers, designers, lawyers, biologists or physicians with a new idea. Occasionally, these people confirm that their idea has commercial potential and want to form a company. For those who wish to incorporate in BC, the BC Registry Services recently updated their forms and guidelines.
Why have some people been confused by the new online application? Probably because the new form forces you to think about a few topics that many people neglected in the past. The steps are:
- Reserve the company's name with the Corporate Registry
- Enter into an Incorporation Agreement
- Established the Notice of Articles (basic articles are provided by BC Registry Services)
- File an Incorporation Application with the Corporate Registrar.
The one part that seems to cause some confusion is the “Authorized Share Structure” section. People get through the first parts of the application then discover they must identify:
- Maximum Number of Shares
- Name of Share Class
- Value of shares
- Special Rights or Restrictions
When you are founding a company, it is very important to give this structure serious thought especially if there is more than one founder, or if you expect more shareholders to join the company later. We cannot give you specific legal advice on what makes the best structure for your situation. You can make it as simple or as complex as you like. One possible structure is: (a) no maximum number of shares, (b) share class is Common shares, (c) no Par Value of shares, (d) no Special Rights or Restrictions. This many not be the best structure for you and you may wish to seek legal counsel. Below are some links that may help you make a more informed decision.
An introduction to simple Shareholder’s Agreements.
The Business Corporation Act (BC, Canada) Authorized Share Structure.
Some additional resource that a new entrepreneur may wish to consider when incorporating, such as how to file an Annual Report or change your Directors can be found at Corporate Online.
Good luck with your new business!
Peter Payne, PhD
Peter is CEO-in-Residence at the Centre4Growth. He has established and run a variety of companies since 1978 from the early days of electronic publishing, to medical devices successfully marketed in Canada, the USA, Europe and Asia. He has been involved with government organizations, private and public companies, reverse take-overs, venture capital corporations and not-for-profit groups. He holds a Ph.D. (Pathology) from the University of British Columbia and is active with the Faculty of Medicine’s Problem Based Learning program. He has been an invited speaker at international conferences, holds a number of patents and has received several awards for his work.
PHOTO CREDIT: Confused man reading a bill or bank statement created by s_falkow August 4, 2009. Photo made available under Attribution-NonCommercial 2.0 Generic license. Last viewed on July 26, 2012.