Types of Corporations

Question

What are the types of Corporations?

Answer 1

Although the terms public corporation and private corporation are often used, only two jurisdictions in Canada (Nova Scotia and P.E.I.) permit the formation of private companies, where the right to transfer shares is restricted, the number of shareholders is limited, and no invitation can be made to the public. Therefore, a better distinction is between corporations that issue shares to the general public and those that do not.

The two types of corporations are also distinguished by the terms widely held and closely held. Widely held corporations issue shares to the general public and usually list their shares on a stock exchange. Closely held corporations restrict the transfer of their shares and do not issue shares to the general public; thus, they have a small number of shareholders. Over 90% of corporations in Canada are closely held, and most of these are small- and medium-sized businesses.