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Company Liquidation in Canada

Company Liquidation in Canada

Company liquidation in Canada can be initiated for few specific reasons. One of the main reasons for winding up is that the company is no longer able to continue its business activities due to a lack of capital. Investors may also opt for this measure if they no longer want to continue their business activity.

Regardless of the reason for which investors opt to close a company in Canada, it must be noted that this procedure is a complex one and it involves the participation of a liquidator and the competent Canadian authorities. Considering these, we invite you to request in-depth information on the process from our specialists.

What should business owners do when winding up a company in Canada?

The steps investors should carry out when closing a company can be different based on the type of company investors have incorporated. Therefore, those who register a business in Canada as a corporation and those who open a sole trader will need to follow slightly different procedures.

Then, the procedure can vary based on the type of incorporation the company has. By this, we refer to whether the company is incorporated at a provincial or federal level. Company incorporation in Canada at a provincial level means that the business has the right to conduct its operations only in the province where it is incorporated, while those at a federal level can conduct activities in all Canada’s territories.

Shareholders have to issue the Articles of Dissolution, pay liquidation fees, make an inventory to assess the current assets the company still has, close the company’s accounts, etc. The accounts of a company refer to the company’s business numbers, such as the VAT number, the payroll account, etc. These procedures can be completed with the help of our accountants in Canada.

Those who have set up a company in Canada must also take into consideration all aspects concerning payroll and employment – they need to terminate employment contracts, pay the employees, inform the institutions involved in employment matters.

Main documents to dissolve a federal company in Canada

In order to be able to close a company in Canada, shareholders must have signed the Articles of Dissolution, the main legal document through which the liquidation can be initiated. For companies registered at a federal level, it is necessary to submit the Articles of Dissolution to Corporation Canada.

Upon the submission of this document, the institution will issue a certificate of dissolution (during this stage, the company’s representatives do not have to pay a fee, the issuance of the certificate is fee exempt). You can rely on our team for further advice on other relevant documentation.

What are the obligations for winding up a business in Ontario?

As we mentioned above, company formation in Canada can vary based on the type of incorporation (provincial/federal), and the same applies for the liquidation procedure. For instance, for a provincial corporation incorporated in Ontario, the following apply:

  • the payment of a liquidation fee of $25;
  • submit a letter of consent issued by the Ministry of Revenue, submitted in maximum 60 days since the issuance of the Articles of Dissolution;
  • prepare documentation on payroll, submitted within 30 days since the business closed down (the Forms T4 and T4A must be completed);
  • companies that have a Workplace Safety and Insurance Board must give a notice of termination of business within 10 days since the company was closed down;
  • it is also necessary to notify the Ministry of Finance in maximum 40 days that the business will close.

Our team can provide the necessary legal support during company liquidation in Canada. You can rely on us for professional services. We also invite you to address us for other business matters, such as business immigration. Our consultants can help foreigners relocate here under the owner operator program in Canada or the intra company transfer in Canada, so do not hesitate to contact us.