Types of Business Entity - Canada

Canada

In Canada entities can be incorporated under either federal or provincial (or territorial) law. Unlimited liability corporations can be formed in Alberta "AULC" and Nova Scotia "NSULC".

The word or expression “Limited”, Limitée, “Incorporated”, Incorporée, “Corporation” or Société par actions de régime fédéral or the corresponding abbreviation “Ltd.”, Ltée, “Inc.”, “Corp.” or S.A.R.F. forms part of the name of every entity incorporated under the Canada Business Corporations Act (R.S., 1985, c. C-44). ≈ Ltd. or Plc (UK)

As an exception, entities registered prior to 1985 may continue to be designated Société commerciale canadienne or by the abbreviation S.C.C.

Under the Canada Cooperatives Act (1998, c. 1), a co-operative must have the word “cooperative”, “co-operative”, “coop”, “co-op”, coopérative, “united” or “pool”, or another grammatical form of any of those words, as part of its name.

Unlike in many other Western countries, Canadian businesses generally only have one form of incorporation available. The aforementioned AULC and NSULC are generally not used as operating business structures, but are instead used to create favorable tax positions for either Americans investing in Canada or vice versa.

Rather, Canadian businesses are generally formed under one of the following structures:

• SP (Sole Proprietorship): No formal business structure is established
• GP (General Partnership): Either a formal structure with a partnership agreement, or an informal structure, in which case the Partnerships Act for the province will apply
• LP (Limited Partnership): An investment structure, limiting both the liability and the participation of the investor. An investor who takes an active role will be deemed a general partner, and become exposed to unlimited liability.
• Corporation
• Joint Venture: A business activity shared by two or more business entities. The joint venture's activities must be finite in terms of either time or scope.