Short answer: An Ontario corporation under the OBCA suits most businesses that operate mainly in Ontario: it is simpler and has no director residency rule. A federal corporation under the CBCA gives national protection of the name and suits businesses planning to operate across Canada, but it requires at least 25 percent resident Canadian directors and still has to register in Ontario.
The two options
A business in Toronto can incorporate under Ontario's Business Corporations Act (OBCA) or the federal Canada Business Corporations Act (CBCA). Both create a separate legal entity with limited liability, and both can do business anywhere in Canada. The differences are in names, directors, filings and administration.
Side by side
| OBCA (Ontario) | CBCA (federal) | |
|---|---|---|
| Name protection | Ontario only | Across Canada, subject to federal name approval |
| Director residency | No requirement | At least 25% resident Canadians |
| Registration in Ontario | Already registered | Must also register in Ontario to carry on business here |
| Annual filings | Ontario annual return | Federal annual return, plus Ontario filings |
| Significant control register | Kept at the registered office, not public | Filed with Corporations Canada; some information is public |
| Usually suits | Businesses operating mainly in Ontario | Businesses planning national operations or wanting national name protection |
When Ontario incorporation makes sense
- your customers, staff and premises are in Ontario
- you have non-resident founders or directors
- you want the simplest ongoing filing obligations
- the business name is not a brand you need to protect across Canada
When federal incorporation makes sense
- you plan to operate in several provinces soon
- national name protection matters to your brand
- investors or partners expect a federal corporation
- at least a quarter of your directors are resident Canadians
Name protection under either statute is not the same as a trademark. If the brand matters, consider a trademark application as well.
What to settle at incorporation either way
- share structure, including classes of shares for founders, family members or investors
- the first directors and officers, and the by-laws
- the registered office and minute book
- the register of individuals with significant control
- a shareholder agreement if there is more than one owner
- tax planning with your accountant before shares are issued
Frequently asked questions
Is it better to incorporate federally or provincially in Ontario?
For most businesses that operate mainly in Ontario, an OBCA corporation is simpler. Federal incorporation fits businesses planning national operations or wanting national name protection.
Do OBCA corporations need Canadian resident directors?
No. Ontario removed the resident Canadian director requirement in 2021.
Does a federal corporation need to register in Ontario?
Yes. A CBCA corporation carrying on business in Ontario must also register in Ontario and make the required provincial filings.
Can I switch from provincial to federal incorporation later?
Yes, through a continuance from one statute to the other, although it involves filings and costs.
Does incorporation protect my business name?
It protects the corporate name within the incorporating jurisdiction. A registered trademark gives broader protection for a brand.
Talk to our team
This guide is general information, not legal advice. For advice on your situation, see our business lawyer in Toronto page. To book a paid consultation (30 minutes, $150 plus HST, paid when you book), book online or call (647) 271-1646. The phone is answered 24 hours a day, 7 days a week, and office meetings are by appointment. Civitas Law is a team of legal professionals under the leadership of lawyer Nasibeh Mehrpouyan, serving clients in English, French, Farsi, Russian and Serbian.