Pre-Incorporation Checklist

1. Select the name of the Company

You must select the name of the company. Alternatively, you may opt for a numbered company.

• A Prince Edward Island company's name must end with one of the following: Limited, Limitée, Incorporated, Incorporée, Corporation, Ltd., Ltée, Inc. or Corp.
• A Prince Edward Island company's name may be in English, French or it may have a version in both languages.
• Choosing a corporate name can be a difficult task. To increase the chances of your proposed name being accepted, try to select a name that is as distinct as possible, yet accurately describes your business. If your proposed corporate name uses common or popular names, the chances of it being accepted decrease. Furthermore, you may not be allowed to use a name which is either identical or deceptively similar to one that is already used by another company or competitor in your jurisdiction.
• Alternatively, a Prince Edward Island company may be assigned a number as its legal name (for example, 123456 Prince Edward Island Inc.). This speeds up the incorporating process and permits immediate delivery of the Articles of Incorporation. The company may then register a trade name and be known to its customers as doing business under the trade name. Although the company must be identified by its actual name (i.e., the number followed by Prince Edward Island Inc. or Ltd.) for all formal and legal matters and relations (e.g., contracts), the company may use its trade name for exterior signs, business cards, letterhead, etc.

2. Select a Registered Office

You must select a registered office for the company that is within Prince Edward Island.

• The registered office of a company is the location officially designated as such by the company to the relevant government department or authority. The registered office may be a commercial or residential address, but should not be a post office box. You will need the complete address.
• The registered office is typically the principal place of business of the company (e.g., store, plant or office) and does not have to actually be an "office". If the company will have more than one place of business, you may select any of the places of business.

3. Select Shareholders

You must select who will be the shareholders of the company.

• Shareholders are the person(s) who hold (i.e., own) the shares in the company. Whoever holds the shares of a company essentially "owns" the company. By reason of the votes that are usually attached to the shares, the shareholders control the company.
• Every private company must have at least 1 shareholder and there may be several (but not more than 50) shareholders.
• You will need the complete residential address of each shareholder.

4. Number of Shares

You must select the number of shares each shareholder will have.

• A company may issue as few or as many shares as it deems desirable. The crucial matter is the proportion of shares that is initially issued to each shareholder, rather than the actual number. For example, if there are 2 shareholders and each is to have a 50% interest in the company, it is irrelevant whether each shareholder receives 10 shares or 10,000 shares each, since in either case, both receive an equal proportion of the shares.
• Nonetheless, it may be advantageous to issue a larger amount of shares. It may facilitate selling a portion of these shares at a later date since each share will have a lower value. Also, subsequent share issues from the company may be more attractive to investors since the value of the shares would be lower given the larger number of shares that were already issued.
• It is not uncommon for the total amount of shares issued to all initial shareholders to equal 1000 shares. However, you may decide to increase or decrease this amount.

5. Individuals with Significant Control (ISC).

You must prepare a transparency register.

As of September 2020, the Business Corporations Act (PEI) was amended to provide greater transparency over who owns and controls PEI corporations. All corporations governed under the Business Corporations Act (PEI) therefore will need to:

• file shareholder information in the new Online Corporate Business Names Registry; and
• create and maintain a register of individuals with significant control.

Existing corporations are asked to include shareholder information when they submit their next annual return. New corporations and companies re-registering in the online system will be asked to file shareholder information when registering or within a period of 60 days.

An individual with significant control is someone who owns or controls a corporation. This individual:

• owns, controls or directs a significant number of shares- meaning
  25% or more of the voting shares; or
  25% or more of all the shares based on fair market value.
• has significant influence over the corporation without owing shares; or
• has a combination of any of these factors.

Register of Individuals with Significant Control

Corporations will also need to create and maintain a register of individuals with significant control. The register is a document - for example, a logbook, database or spreadsheet - that contains information about each individual with significant control. For each individual, the register must include:

• name;
• date of birth;
• address;
• county where the individual is resident for tax purposes;
• the date when control started (for example, share purchase date);
• the date when control ended (for example, share transfer date); and
• a description of how the individual has significant control.
  

Corporations must update their register annually OR within 15 days of becoming aware of a change affecting their register.

6. Select Directors

You must decide who will be the directors of the company.

• Directors are the individuals who administer the affairs of the company and make all major decisions for the company.
• Every company must have at least 1 director, and there may be several. Only individuals (i.e., physical persons) may be directors of a company.
• A Prince Edward Island company DOES NOT require that any of its directors be Canadian residents.
• Directors may also be shareholders and officers (see below) of the company. In fact, this is typical in small companies.
• You will need to know the following for each director: their complete residential address, whether they are Canadian residents and their profession.

7. Select Officers

You must decide who will be the officers of the company.

• Officers are the persons who hold certain senior management positions, such as President, Vice-President, Secretary and Treasurer, among others.
• A company must appoint a President and a Secretary.
• Officers may hold more than one office or position. For example, an individual may be the President, Secretary and Treasurer of the company.
• Officers may also be directors and shareholders of the company. In fact, this is typical in small companies. There is no Canadian residency requirement for officers.
• You will need to know the following for each officer: their complete residential address and their profession.

8. Fiscal Year-end

You must select the fiscal year-end of the company.

• A fiscal year is any 12-month period used by a company as its official accounting period. A fiscal year-end is the official last day of the fiscal year of a company. The fiscal year-end does not need to be December 31, but is typically the last day of the chosen month.
• It is not uncommon for companies to select December 31 as their fiscal year-end. However, you may change this date if you have specific reasons for doing so.

7. Select Accountants

You may select the auditors or accountants of the company. If you do not, you may still incorporate.

• Auditors are the professionals who check the accuracy, fairness and general acceptability of a company's accounting records and attests to them. A company must generally appoint an auditor to prepare the annual financial statements of the company. The accountant should be a CA, CGA or other professional with the proper credentials. Alternatively, you may appoint accountants to prepare the financial statements of the company but who will not act as auditors of the company.
• Shareholders of a private company may choose not to appoint an auditor for any given fiscal year. All the shareholders must agree to this decision. This decision remains valid only until the next annual meeting, where all the shareholders of the company must once again consent to not appointing an auditor for the following fiscal year.

8. Government Incorporation Fees

Prince Edward Island companies have a government incorporation fee of $250.00 as well as a $15.00 publication fee. Named companies also require to obtain a Name search report and reservation at a cost of $40.00.