Organizing Your British Columbia Corporation

Now that you have received your British Columbia certificate of incorporation, the next step is to complete the internal organization of the corporation.

First directors

When you incorporated, you filed information about your Initial Registered Office Address and First Board of Directors.

The mandate of the first directors begins on the date Corporations Canada issues the certificate of incorporation and ends at the first meeting of shareholders. At that first meeting of shareholders , the shareholders elect the corporation’s directors. The shareholders can elect the first directors or elect other individuals.

Organizational meeting

Early in the life of your corporation, an incorporator or a director will likely call an “organizational meeting.” The notice for this meeting must be sent at least five days before the meeting to each director.. This notice must indicate the date, time and place of the meeting.

At this meeting, the directors can:

• make by-laws (see Making by-laws ; these by-laws will have to be approved by shareholders at the first meeting)
• adopt the forms of security certificates (shares) and corporate records the corporation will use
• authorize the issuing of shares (see Issuing shares ) and other types of securities
• appoint officers (see Appointing the officers)
• appoint an interim auditor to hold office until the first meeting of shareholders
• make banking arrangements
• take care of any other business.
• Making by-laws

By-laws are rules that govern the internal operations of a corporation. For example, you might want to set some rules for your corporation that are not dealt with in the British Columbia Business Corporations Act. You also might want to modify some of the rules that are in the British Columbia Business Corporation Act , as long as those changes are permitted by the Act. Some model by-laws can help you with content and wording.

Among other things, your by-laws can:

• set the date of your corporation’s financial year-end
• make banking arrangements
• address the appointments, qualifications and duties of officers
• delegate the responsibility for setting the salaries of directors and officers
• establish the salaries or other remuneration of directors and officers
• set down the procedures for calling and conducting directors’ and shareholders’ meetings
• establish the minimum number of people required at directors’ and shareholders’ meetings to establish quorum (that is, enough people to make binding decisions)
• make rules limiting the modifications that can be made to the powers given to corporate directors under the British Columbia Business Corporation Act (for ex., the by-laws
• could make all share issuances subject to shareholder approval).

Unless your corporation’s by-laws state otherwise, the directors have the power to make, repeal and amend the by-laws. Every new by-law and any by-law change (including the repeal of a by-law) require shareholder approval at the first regular meeting of shareholders after the directors have passed the new or amended by-law. The effective date of a by-law is the date it is passed by the directors, not the date of approval by shareholders.

Issuing shares

One of your British Columbia corporation’s first activities following incorporation will be to issue shares. A person becomes a shareholder when a corporation “issues” shares in that person’s name. Unless you indicate differently in your articles of incorporation or by-laws, your corporation’s board of directors can generally issue shares whenever it wishes, to whomever it chooses, and for whatever value it decides.

Directors can decide to issue shares by majority vote. The directors’ decision (called a resolution) to issue shares must be recorded in the corporation’s minute books.

The corporation cannot issue a share until it actually receives full consideration (payment) for that share. This consideration is generally in the form of money, although it can also be in the form of services or property given to the corporation. A person’s payment for the share(s), in a form agreed upon by the directors, represents that person’s investment in the corporation.

Once a share has been issued, the shareholder is entitled to a share certificate. This certificate must state:

• the corporation’s name, as set out in the articles of incorporation
• the name of the shareholder
• the number and class of shares it represents.

If your articles of incorporation contain restrictions on share transfers (as do the articles of most small corporations), the share certificate itself must refer to these restrictions.

All shares are without nominal value (also known as par value). A share certificate does not carry any monetary value and no value appears on the certificate.

Appointing the officers

Officers are responsible for the day-to-day operations of the corporation. The directors are responsible for appointing officers. With the directors, the officers will form the management of the corporation. Officers can take any position that the directors want them to fill (for ex., president, secretary or any other position).

First meeting of shareholders

The directors of your corporation must call the first shareholders’ meeting within 18 months of the corporation’s date of incorporation. This meeting is usually held after the first organizational meeting of the directors.

At this meeting, the shareholders:

elect directors
if the directors change from those you indicated on your articles of incorporation and First Board of Directors, you will need to file the change regarding directors
confirm, modify or reject the by-laws established by directors
appoint an auditor. Note that this auditor can either be the same one appointed by the directors or a different one.