Personal Real Estate Corporation – Ontario

Real estate is a regulated profession in Ontario, so all salespersons and brokers must be registered with the Real Estate Council of Ontario (RECO). We offer custom option for you so you can order as per your business requirements. Personal Real Estate Corporation (PREC) is easy and quick form of corporation for salesperson or broker in Ontario.

What is PREC :

Conditions :

Guidelines:

WHAT NAME CAN I USE FOR THE PREC?

There are no limitations or specific requirements with respect to the name of a PREC other than those imposed on any business corporation incorporated or continued under the Ontario Business Corporations Act. The name must meet the normal rules for corporate names and should not suggest that the PREC itself is trading in real estate. An example of an appropriate name would be the individual Registrant’s name followed by a “Professional Real Estate Corporation”. For example: “Jane Doe Professional Real
Estate Corporation”.

CAN A PREC BE USED FOR PASSIVE INVESTMENT PURPOSES?

DOES THE HOLDING CORPORATION HAVE TO BE OWNED BY THE REGISTRANT THAT OWNS THE PREC?

Yes, it must meet the same criteria at a minimum as the PREC itself. Please consult your lawyer for further advice on how to do that and on structuring the holding corporation.

WHO CAN BE A NON-EQUITY SHAREHOLDER IN MY PREC?

Members of your family, which includes your spouse, children, a trust for a minor child or children (under 18 years of age) and parents. The definitions of who a spouse, child and parent is are fairly broad. The definition of spouse is “a person to whom the shareholder is married or with whom the shareholder is living in a conjugal relationship outside marriage.” The definition of a child includes one you have “demonstrated a settled intention to treat as a child of his or her family, except under an arrangement where the child is placed for valuable consideration in a foster home by a person having lawful custody.” The definition of a parent includes a person who has “demonstrated a settled intention to treat [you] as a child of his or her family, except under an arrangement where the child is placed for valuable consideration in a foster home by a person having lawful custody.” In addition, a trust for minor (under 18) children can own non-equity shares of a PREC.

CAN A HOLDING COMPANY OWN ANY OF THE SHARE OF THE PREC ?

The legislation requires that all the equity shares of the corporation be legally and beneficially owned, directly or indirectly, by the controlling shareholder. It also provides that all the non-equity shares must be owned directly or indirectly by a family member. A family member is a spouse, child, parent, or a trust for a minor child. Whether shares will be held directly or indirectly by the controlling shareholder or a family member is a business decision to be made by the registrant setting up the PREC. Legal advice should be sought to ensure compliance with the law.

ARE THERE ANY RESTRICTION ON ACTIVITIES A PREC CAN ENGAGE IN?

The PREC must not trade in real estate other than to provide the services of its controlling shareholder (broker or salesperson) to the brokerage. There are no restrictions in the legislation on what other activities a PREC might engage in. Permitted activities will depend on the objects of the corporation. However, there may be limitations on the corporation if it is used to operate in another regulated sector.

Number Corporation :

Every incorporated business must have a name that legally identifies it. This is called a corporate name. A numbered name is the simplest way to name your corporation because Govt. assign the number. You can use a different name to conduct business. for example, 12345678 Ontario Inc. (Ontario).

Named Corporation:

Every incorporated business must have a name that legally identifies it. This is called a corporate name. Word name, made up of letters and symbols. It has to be distinctive and must not cause confusion with other names or trademarks. The name also cannot include prohibited terms. For example, John Smith Personal Real Estate Corporation.

Nuans Reservation Report:

A Nuans Reservation report provides a list of existing corporate names, business names and trademarks that are similar to the one being proposed. The report is necessary for federal and Provincial name corporations. It is valid for 90 days only. Getting a Nuans Reservation Report does not mean that your name is pre-approved or approved by Corporations Canada.

Minute book:

Corporations often maintain their corporate records in a single book, referred to as the “Minute Book” of the corporation. Your corporation is a separate legal entity that must fulfill certain obligations under the Canada Business Corporations Act (CBCA). Your corporation must keep certain corporate records at its registered office (or at some other location in Canada, as set out by the directors). These records are;

• articles of amendment, including amended articles of incorporation or restated articles of incorporation
• by-laws and their amendments
• any unanimous shareholder agreement
• minutes of meetings and shareholder resolutions

Initial Return:

An Ontario business or not-for-profit corporation must file Initial Return/Notice of Change under the Corporations Information Act to report any changes to the corporate such as – Address, director/officer information). All Ontario business and not-for-profit corporations are required to file Initial Return setting out the prescribed information within 60 days after the date of incorporation, amalgamation or continuation into Ontario of the corporation (S. 2(1) & (2) of the Corporations Information Act).

Annual Return:

In order to keep the corporation active and in good standing, the corporation must file an annual return after the anniversary date. This return not related with income. This is other corporation information: address, director, officer.

CRA Business Number:

A unique, 9-digit number and the standard identifier for businesses which is unique to a business or legal entity. Every business must need these unique identifiers in order to open other CRA accounts such as a GST/HST account and/or Payroll account.

Corporate Tax ID:

Every business needs a Corporate Tax ID in order to file an Income tax return for the corporation.

HST/GST Account:

You have to register for a GST/HST account if You make taxable sales, leases, or other supplies in Canada.

Payroll Account:

If you are a trustee, an employer, or a payer of other amounts related to employment, you have to register for a payroll account with CRA. This is deduction account to process payroll.

Dividend Account:

Divided account in order file divided amount to CRA, this will be your legal obligation.