Incorporation: Not a DIY Project

Incorporation: Not a DIY Project

As corporate lawyers, we often are asked to assist self-incorporated companies that are now involved in the expensive, frustrating and time consuming task of legally resolving corporate problems arising from an improperly incorporated company.


These are usually mistakes that could have been avoided with a careful and thoughtful initial incorporation strategy, with a view to the specific needs of the new company, its operations and its future plans.


We see mistakes made during the incorporation process on a regular basis, and more often than not it is because the incorporator failed to obtain adequate legal advice.

Here are some common errors made when incorporating:
  • Failing to retain appropriate legal assistance;
  • Believing that your corporation is ‘simple’ because the operations are straightforward or there is only one director or shareholder;
  • Believing that the basic incorporation documents are sufficient to resolve issues pertaining to the company, its operations and its future;
  • Failing to create appropriate Articles of Incorporation or issue shares;
  • Having more than one shareholder, without the appropriate shareholder’s agreement and share structure specific to the needs of its shareholders;
  • Issuing shares without making those shareholders accountable for their continued contribution to the development of the company;
  • Operating outside the bounds of your corporate authority;
  • Not obtaining personal security or indemnification for the company for its key directors;
  • Believing that provincial or Canadian law establishes rules that allow for the efficient resolution of corporate problems; and
  • Not consulting an accountant with respect to tax implications and responsibilities.

Legal counsel can help you understand about corporations and incorporation, but also their limitations and boundaries. This is extremely advantageous and enables you to avoid significant and costly mistakes.

If you are incorporating a new BC company or dealing with ongoing corporate development, it is important to know the appropriate steps to take. Our experienced lawyers can help you navigate this tricky terrain. If you would like advice regarding incorporation or for more information regarding such matters please contact Chahal Priddle LLP at 250-372-3233 to set up an appointment today.