Business
Canada — Business: Private Limited Company (Corporation)
A Canadian private corporation is a legal entity separate from its shareholders, who are generally not personally liable for its debts beyond what they invested. It can be incorporated federally under the Canada Business Corporations Act (CBCA) or provincially under a provincial statute. Under the CBCA, at least 25% of directors must be resident Canadians (a corporation with fewer than four directors needs at least one), except in sectors with ownership restrictions, where a majority is still required. Corporate tax returns (T2) are filed with the CRA separately from personal returns.
VerifiedGovernment / official sourceCorporations Canada (ISED) — Canada Business Corporations ActLast reviewed: 2026-10-23
Key facts
- A corporation is a legal entity separate from its shareholders, who are generally not personally liable for its debts.
- A corporation can be incorporated federally under the CBCA or provincially under a provincial statute.
- Under the CBCA, at least 25% of directors must be resident Canadians; a corporation with fewer than four directors needs at least one. Sectors with ownership restrictions still need a majority of resident Canadian directors.
- Corporations file a T2 corporate income tax return with the CRA, separate from personal returns.
Common mistakes
- Assuming the old rule that a majority of directors must be resident Canadians still applies to ordinary CBCA corporations — it is now 25%, with exceptions for restricted sectors.