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Forming a “Limited” Corporation
The word “limited” at the end of a Canadian corporation’s name implies that liability of the corporation’s shareholders is limited to the money they paid to buy the shares. By contrast, ownership by sole proprietor or partnership carries unlimited personal legal responsibility for debts incurred by the business.
How is a limited corporation formed?
To form a limited corporation, you must provide a corporate name and address, describe the structure and identify the type of corporation and provide director information. The following information is provided to assist you in this process.
There are different types of names. You can have a “named” name, such as ABC Holdings Ltd., or a “numbered” name, such as 1234567 Alberta Ltd.
A “named” name should consist of three parts, or elements. The first part is usually the distinctive element. In the example, “ABC Building Supplies Ltd.”, the distinctive element is “ABC”. This part should set your name apart from other names, making it easy to remember. The second part describes what the corporation does or is.
In our example, “Building Supplies” is the descriptive element. The third part is the legal element – our legal element in this case is “Ltd.” There are other legal elements, one of which must be in your corporation’s name.
Accepted legal elements are:
- Unlimited Liability Corporation
- Professional Corporation
Another type of “named” name corporation is a “Professional Corporation” which is a corporation specifically formed for one of the following types of professions:
- Chartered Accountant
- Certified Management Accountant
- Certified General Accountant
This type of corporation will have the person’s name, followed by the term “professional corporation”. An example of a professional corporation’s name would be “John Smith Professional Corporation”.
A “numbered” name is also comprised of three parts – the numbered part, which is assigned by Corporate Registry, the word “Alberta”, and your choice of one of the legal elements. A NUANS report is not necessary for a numbered name.
To incorporate with a “numbered” name, you must specifically request this type of name through the authorized service provider that you have selected.