A corporation can be incorporated provincially (in Ontario under the Ontario Business Corporations Act) or federally (under the Canada Business Corporations Act). Both federal and provincial corporations can carry on business anywhere in Canada as long as they register with the individual provinces and pay the appropriate fees.
Traditionally, federal incorporation has been considered appropriate for businesses that conduct business in several provinces but there are other considerations such as the cost of incorporating and maintaining the corporation, directors’ residency requirements, and protection of the corporate name that should be taken into account when deciding where to incorporate.
Directors’ residency requirements – A federal corporation requires that at least twenty-five percent of the directors be resident Canadians while an Ontario corporation requires that at least fifty-one percent of directors be resident Canadians.
Obtaining a corporate name – it is more difficult to get approval of a corporate name at the federal level than at the provincial level.