British Columbia Incorporation Agreement
To incorporate a new company in British Columbia, the British Columbia Business Corporations Act states that one or more persons may form a company by entering into an incorporation agreement, establishing articles for the company which sets out its rules for conduct and by filing with the Corporate Registry an Incorporation Application.
An incorporation agreement is an important document when a company takes steps to incorporate. Also known as a pre-incorporation agreement, it will help prevent misunderstandings about the roles and responsibilities of the principal parties of an incorporated entity.
It sets out such details as the name of the corporation being formed, its purpose, the names of the directors and officers at the time the business is incorporated, share distribution, and even salaries for the directors and officers. With this document, you can confidently enter into agreements and make key decisions prior to the actual formation of your business as a corporation.
The incorporation agreement exists prior to the directors filing formal Articles of Incorporation with the British Columbia Corporate Registry Office. The directors, also known as the corporation’s promoters, can be held personally liable for any breach of the agreement should the corporation not actually be formed. Therefore, all parties to the agreement should insist on an acknowledgment within the document that the corporation has yet to be formed. This language will ensure that they avoid any personal liability.
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Our British Columbia Incorporation agreements include:
- The name of the corporation that meets the state of incorporation’s criteria for uniqueness.
- A statement explaining why the business is being formed. This can be general (“to engage in any lawful activity”) or specific as desired, although too specific a statement of purpose can limit the flexibility of the corporation in the future.
- Business address.
- Names and addresses of the directors of the corporation.
- The amount of the capital contribution being made by initial shareholders of the corporation.
- Identifying who can conduct financial transactions, such as opening bank accounts and signing checks.
- Assigning authority to conduct business, i.e. sign contracts, conduct negotiations, etc.