Should I incorporate federally or in Ontario?

The short version

Most founders building in Ontario can incorporate either way. The choice usually comes down to three things: who will sit on your board, how much your company name matters across Canada, and how much ongoing paperwork you want.

	Federal (CBCA)	Ontario (OBCA)
Director residency	At least 25% resident Canadians (at least one if fewer than four directors)	No residency requirement
Name	Usable across Canada	Registered in Ontario
Government fee to incorporate online	$200	$300
Operating in Ontario	Also file an Ontario extra-provincial registration (no fee)	Nothing further
Significant control register	Kept by the company and filed with Corporations Canada	Kept by the company, not filed

Who can be a director

Under section 105(3) of the CBCA, at least 25% of a federal corporation’s directors must be resident Canadians, or at least one if the board has fewer than four directors. Ontario repealed its director residency rule, formerly section 118(3) of its Business Corporations Act, effective July 5, 2021, so an Ontario corporation can have a board made up entirely of non-residents.

If you have a co-founder or early investor outside Canada who should sit on the board, that difference can decide the question on its own.

Your company name

Corporations Canada reviews names closely, and a federal corporation has the right to use its name across Canada, as the Government of Canada explains. If you expect to operate in several provinces, or your brand depends on one name nationwide, that matters. Name rights are separate from trademark protection, which you may still want for your brand.

Government fees

Filing federal articles of incorporation online costs $200, under Schedule 5 of the federal regulations. A federal corporation that carries on business in Ontario must also register in Ontario by filing an initial return, which has no Ontario fee and can be done at the same time as incorporation online. According to Corporations Canada, the deadline is within 60 days after the corporation starts carrying on business in Ontario.

Filing Ontario articles of incorporation costs $300, according to Ontario’s fees page. Government fees can change.

These are government fees only. Legal fees for setting up the company properly, including the share structure, bylaws and founder documents, are separate.

Ongoing filings

Both kinds of corporation file an annual return. The federal fee is $12 online, and Ontario’s annual return has no fee. Missing federal annual returns can lead to the corporation being dissolved.

Both must also keep a register of individuals with significant control, meaning the people who own or control a significant share of the company. A federal corporation files that information with Corporations Canada every year and within 15 days of a change, and some of it is made public. An Ontario corporation keeps its register at its registered office or elsewhere in Ontario and doesn’t currently file it with the government. Ontario has passed an amendment to its Corporations Information Act (new section 6.1) that would allow regulations to require filing, but that provision isn’t in force yet.

How to decide

Incorporating in Ontario is often the simpler choice for a founder team based in Ontario that doesn’t need national name rights, especially if any director lives outside Canada. Federal incorporation can make sense if you expect to operate across Canada from early on, want the name protection, and have resident Canadian directors.

Getting the share structure, founder vesting and shareholder agreement right usually matters more than the jurisdiction. Those are the documents investors look at closely.

This guide is general information about Ontario and Canadian law, not legal advice for your situation. To talk through which is right for your company, book a free 15-minute consult.