There are five categories of roles that need to be filled for each company in Canada.
You must decide who will fill each of those roles for your new company at the time of incorporation or soon after that (and there is no need to sweat it if you are a solopreneur… one person can fill all the roles).
In this article, we will provide more information about those five categories of roles:
1. Incorporator
The term “incorporator” essentially means “founder”. The incorporator is the person, or persons, that are on record as the people who formed the corporation.
The incorporators become the first directors of the corporation. However, follow the steps for properly forming your corporation. You will have a shareholders meeting soon after incorporating, when directors are elected (and those directors can be the incorporators, or they can be someone totally new).
Sometimes, you will see that a professional service provider (like a lawyer or an accountant) who is helping you incorporate the company will put their name down as the incorporator. Usually, that’s because it makes the whole process more accessible (don’t worry… you can still call yourself the “Founder”!). In those cases, a new board of directors is elected right after the time of incorporation (usually the same day), and the service provider ceases to be a director.
2. Directors/Board Members
Every corporation in Canada is required to have directors. Director roles are crucial because they can exert quite a bit of power over the direction of the business.
In corporations with multiple shareholders (particularly unrelated shareholders and those who are not active in the business), the Board of Directors holds an especially central position. The shareholders entrust them to oversee the company’s activities, make strategic decisions, ensure compliance with legal and ethical standards, and ensure the company’s finances are healthy.
In corporations with only one shareholder, or related shareholders, or shareholders that are all active in the business, the directors still have the same powers, but the “board” is not as central of a figure in the company… because most people involved in the company are wearing many hats (i.e. incorporator, officer, director, and employee). Regardless, such companies still need to appoint directors and comply with the legal requirements for directorships.
Most privately held corporations in Canada have between 1 and 10 directors.
For more information about the role of directors, you can check out our article called, What Are Directors, Officers, and Shareholders?
3. Officers
Every corporation also needs officers.
Officers are only named after a company is incorporated, but it’s usually a good idea to have it figured out before you go ahead with incorporation.
Officers are individuals appointed by the Board of Directors to manage the company’s day-to-day operations. Common officer roles include:
President
This title is often interchangeable with CEO. The President is the person who is ultimately responsible for the company’s day-to-day operations.
Secretary
Along with the President role, this is a mandatory officer role in most situations (and even if not mandatory, it’s a good idea to name someone as Secretary, and most by-laws speak to Secretary roles). The Secretary is responsible for maintaining accurate records of meetings, ensuring legal compliance, and handling official correspondence.
Treasurer
The Treasurer manages the organization’s finances, including budgeting, financial reporting, and overseeing financial policies and procedures.
For more information about the role of officers, you can check out our article called, What Are Directors, Officers, and Shareholders?
4. Shareholders
Shareholders are the ultimate beneficiaries of the corporation.
Like officers, shareholders are not formalized until after a company is incorporated (with the exception of British Columbia, Nova Scotia, and Yukon, which have a unique process in this regard). In fact, sometimes, a company can be incorporated for many months before anyone becomes a shareholder.
Although shareholdings are not formalized until after incorporation (with the exceptions mentioned above), everyone must agree about who will hold what shares before proceeding with incorporation. Also, the share classes of the corporation are created at the time of incorporation, so that’s another reason to have a conversation about shareholdings before incorporation.
5. Professional Advisors
Companies often benefit from the expertise and guidance of professionals and advisors. The most common and most crucial are accountants (supported by bookkeepers) and lawyers. For larger and more complex organizations, many more categories of professionals can add value: HR professionals, tax advisors, marketing professionals, etc.
These individuals or groups may not have voting powers or formal roles in the company, but they provide valuable advice and support in specific areas. When you first incorporate a company, you should know who you will contact for support: bookkeeping/accounting, legal, and banking.
For all your corporate services needs, like incorporating and annual maintenance, you don’t have to look far… You can turn to Tobuso to help you out with those reliably. All you need to do is sign up and follow the prompts. Alternatively, you can contact us to start a conversation.