Articles of Incorporation are the building blocks for the creation of a new Alberta Corporation. That's because they're the primary rules governing the management of your corporation in the province.
Within the Articles of Incorporation, there are seven questions that must be answered. The article below explains what to include within each section of the form.
Question #1 – What will you name your corporation?
When coming up with a name for your corporation, think about the images, feelings and incentives you want customers to have. For more information on choosing a name for your Alberta Corporation, read: How to Select a Name to Incorporate.
Question #2 – How will you organize the rights, responsibilities and privileges of the owners of your corporation?
This is actually a big question, with a lot to consider. All corporations are required to designate their share structure at the time of incorporation.
* What is a shareholder?
Shareholders are entities who invest in a corporation and have the ability to make decisions for the corporation and profit from the corporation’s success. Simply put, shareholders are the owners of the corporation.
* What is a share structure?
A share structure is a description of how the corporation wishes to organize the rights, responsibilities and privileges of the shareholders. A good share structure should address:
- How many classes of shares the corporation wishes to designate;
- What privileges or conditions those classes hold; and,
- The maximum number of shares the corporation intends to issue within each designated class.
In general, there are three basic rights associated with shares:
- The right to vote;
- The right to receive dividends when declared;
- The right to receive the remaining assets of the corporation upon dissolution.
You may wish to designate only one class of shares; it would then be implied that each share would equally possess all rights, restrictions and privileges possible for a share to hold.
Let us show you some examples:
- One class of shares, designated as common voting shares, in an unlimited number
In this example, the corporation has designated only one class of shares. It's important that each share possesses all rights, restrictions and privileges equally and the corporation may issue an unlimited amount of these shares.
- 500 Class “A” common voting shares and 300 Class “B” non-voting shares
In this example, the corporation has up to 500 shares they may issue that are granted the right to vote and up to 300 shares they may issue that do not have voting rights.
This share structure may be beneficial for businesses who wish to invite additional investors into the business but want to keep the decision-making rights (voting rights) restricted. Alternately, you may wish to “sprinkle” the rights, restrictions or privileges of the shareholders by designating more than one class of shares.
When designating your share structure, please be aware that there are certain terms that are prohibited within a share structure:
- Any term that describes the value of a share is prohibited; terms such as stated capital value, par value, nominal value or any monetary amount assigned to a share may not be included within a share structure.
For example: 200 Class “F” shares, valued at $4 per share would be prohibited.
- The term “common” without an acceptable right, restriction or privilege is prohibited.
For example: 100 Class “A” common shares would be prohibited.
- As the name implies, common shares are the most usual and commonly issued form of shares. A class of shares described as common, typically has the right to vote; however the term “Common” may only be presented within a share structure when used with a described right, restriction, privilege or condition.
For example: 600 Class “A” common voting shares would be acceptable.
It's advisable to think about the future growth of your business when considering your share structure. It’s possible to keep a class of shares unissued within your articles of incorporation in the event they are needed. Amending your articles of incorporation in the future to designate an additional class of shares or to increase the maximum number of shares within a class, for example, can be costly.
Question #3 – Will you place any restrictions on the transfer/sale of your corporation’s shares?
Occasionally, a corporation may wish to restrict the sale/transfer of shares or a particular class of shares. For example, a corporation may wish to restrict the sale of all shares or a class of shares to the directors of the corporation. These types of shares are not mandatory and if you do not wish to place any restrictions on the sale/transfer of shares, you may indicate “none” for question #3.
Question #4 – How many directors will your corporation have?
The directors of your corporation are individuals who will take care of the day-to-day operation of the business. You will have two options when answering Question #4; you may either:
- Supply a set number of directors to run your business.
- Designate a minimum and maximum number of directors to run your business.
You must always have at least one director appointed at all times. It is advisable to consider the future growth of your business when determining the number of directors to designate. Amending your articles of incorporation in the future to allow for additional directors can be costly.
Question #5 – Will your corporation be restricted FROM carrying on a certain type of business, or be restricted TO carrying on a certain type of business?
Occasionally, a corporation wishes/is required to place restrictions on the nature of business they may conduct. These types of restrictions are not mandatory and if you do not wish to place any restrictions on the nature of your business, you may indicate “none” for question #5.
Question #6 – Do you wish to include any other rules or provisions within your articles of incorporation?
The corporation is given the opportunity to specify additional information within their articles of incorporation in the other rules and provisions field (question #6). This additional information is not mandatory and if you do not wish to include any additional rules or provisions you may indicate “none” for question #6.
Question #7 – On what date do you wish to become a corporation?
The date specified in question #7 is the effective date of incorporation; the date the business becomes a valid legal entity in Alberta with the ability to conduct business legally as an incorporated company. This date may be designated as the date the paperwork is entered at the registry, or up to 30 days in the future. Please note, however, this date cannot be in the past.
Important Additional Information
If information within the Articles document is in excess of 200 characters, it must be attached to the transaction electronically.
To speed up the incorporation process, please have this information available in electronic format; i.e. memory stick or email that has been properly formatted in Microsoft Word. If the information you attach electronically is not formatted, you may be charged a small document-formatting fee per page. If you would like to avoid any additional fees, please contact an AMA Registries representative who can provide you with a properly formatted template for your Articles of Incorporation.
A certified registry agent may provide assistance, but please be advised that the role of the agent does not include the provisions of legal advice. AMA recommends that you consult a lawyer licensed to practice law in Alberta on all matters pertaining to the regulations of documents in the corporate registry.
If you need additional information or help filling in your Articles of Incorporation form, please call toll-free: 1-866-989-6370