Have your articles and bylaws reviewed by a lawyer

Why have your articles reviewed before filing?

The Articles of incorporationArticles of incorporationDocument filed with the registry setting the name, share capital, number of directors and restrictions.See definition → are the corporation's founding document. Once filed, they set the rules that every later decision has to respect: which shares exist, what rights they carry, who can buy them and how many directors sit on the board. The bylaws then fill in the day-to-day governance: meetings, quorum, officers, signing authority and banking.

Most founders incorporate with a standard structure, and Incorpo's guided questionnaire is built for that. A review becomes useful when the structure is no longer standard: several founders with unequal roles, an investor, a holding company, family members as shareholders, or plans to pay dividends to some shareholders and not others. In these situations, the wording of the articles has legal and tax effects that a questionnaire cannot weigh for you.

There is also a cost argument. Fixing articles after filing means filing articles of amendment, with a government fee each time. Federal: $200 online, $250 otherwisesource. Ontario: $150source. Quebec: $206 ($309 priority)source. A review before filing aims to get the structure right the first time.

What an articles of incorporation review covers

The review looks at the documents Incorpo prepares from your answers, read against the corporate statute that will govern the corporation and against what you tell the lawyer about your plans.

• Name: the legal ending, the French or bilingual form where relevant, and the risk of confusion with existing names or trademarks. Federal language rule for the articles: Either official language, both, or bilingualsource.
• Share structure: the classes of shares, the number authorized, and the rights, privileges, restrictions and conditions attached to each class.
• Restrictions on share transfers: the clause that keeps the corporation private, usually requiring director or shareholder approval before shares change hands.
• Directors: the minimum and maximum number, and whether the proposed directors meet the statute's rules. Federal residency rule: At least 25% of directors must be resident Canadians; at least 1 if fewer than 4 directorssource.
• Other provisions: restrictions on the business the corporation may carry on, borrowing powers and any special clauses.
• Bylaws: meetings, quorum, officers, signing authority and how the bylaws fit with the articles and any shareholder agreement.

The review does not replace tax planning. If the structure is designed for income splitting, a holding company or an estate freeze, the lawyer may suggest involving your accountant, since the share terms and the tax rules work together.

Share classes and rights

The share structure is the part of the articles founders most often get wrong, because it looks technical and the standard choice seems good enough. Corporate statutes generally describe three basic rights that every corporation must give to at least one class of shares: the right to vote, the right to receive dividends and the right to share in what is left on dissolution. How those rights are split between classes is up to the founders.

• Common sharesCommon sharesShares carrying voting rights and a share of residual profits. The base class of every corporation.See definition → usually carry the vote and the growth in value of the business.
• Preferred sharesPreferred sharesShares with special rights (priority dividend, redemption), usually non-voting.See definition → usually have a priority right to dividends or to capital, often without a vote; their terms are set in the articles.
• Discretionary dividend clauses allow the directors to pay a DividendDividendShare of profits paid to shareholders by board resolution.See definition → on one class without paying the others, which has tax implications to review with an accountant.
• Redemption and retraction rights let the corporation buy back shares, or the shareholder require it to, at a price set by formula.

The lawyer checks that the rights you want exist in the text, that the classes do not contradict each other, and that the structure leaves room for what you have planned, such as bringing in an investor or an employee shareholder.

Points a review often raises

Every file is different, but some questions come up again and again when a lawyer reads draft articles. They are listed here so you can think about them before the review, not as answers to them.

• Equal founders, equal shares? Founders who contribute differently (money, time, intellectual property) sometimes want the share split, or the vesting of shares, to reflect it. Vesting and buyback terms usually live in a shareholder agreement rather than in the articles.
• Room to grow. A structure with a single class of shares can make it harder to bring in an investor or an employee later without amending the articles.
• Who controls the board? The number of directors and the voting rights of each class decide who can appoint them.
• Dividends that follow the plan. If dividends are meant to go to some shareholders and not others, the share terms have to allow it, and the tax rules have to be checked with an accountant.
• Transfers and exits. The transfer restriction in the articles is only a first layer; what happens when a founder leaves is usually set out in a shareholder agreement.
• Consistency. The articles, the bylaws, the organizational resolutions and any shareholder agreement have to say the same thing. Contradictions are a common source of later disputes.

The lawyer's comments come back as notes or tracked changes on the draft. If a change affects other documents, such as the organizational resolutions or the share issuance, Incorpo updates those documents to match before you sign.

Who reviews your documents

The review is done by a lawyer from our partner law firm, which has lawyers in Ontario and Quebec. Incorpo does not practise law and does not give legal advice: we prepare documents from your answers and handle the filings. Any opinion on your situation, and any change the lawyer suggests to the structure, comes from the lawyer.

Which corporate statutes the partner firm reviews depends on where its lawyers are called to the bar. When you order, we confirm whether the review is available for your jurisdiction before you pay.

Turnaround time

A review adds a step between your questionnaire and the filing. The time it takes depends on the complexity of the structure and on the back-and-forth with the lawyer: a single-founder corporation with one class of shares has little to discuss, while a multi-class structure with an investor can take a few exchanges.

We do not publish a fixed turnaround on this page. The expected timing is confirmed when you order, and your file shows where the review stands. Nothing is filed with the registry while the review is open, so the government processing time only starts once you approve the final documents.

Reviewing articles after incorporation

The review is not only for new corporations. Owners often look at their articles again when something changes: a new shareholder, an investor, a holding company, a spouse or children joining, or a sale. If the lawyer suggests changes, they are made by articles of amendment, which Incorpo can prepare and file once you approve them.

• Adding a class of shares, or changing the rights of an existing class.
• Changing the number of directors or the name.
• Removing restrictions on the business the corporation may carry on.
• Aligning the articles with a new shareholder agreementshareholder agreementContract governing relations between shareholders: voting, share transfers, exits, disputes.See definition →.