3 ways on starting your business in Canada as a Foreigner

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Written by: Raoul Padilla
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Canada is one of the world’s fastest-growing business industry.

Gaining the 10th spot in GDP Ranking (2019-2023) for having a strong economy, it became an apple of the eye for many foreign investors. Canada’s long-term outlook in the business industry is really inviting but the Canadian Government selects business class immigrants based on their ability to become economically established, businesses who can support the development of the Canadian economy. Here is a complete guideline on how a Non-Canadian Citizen can expand or start a new business in Canada.

For existing foreign corporations, you can register to operate in Canada by either:
  1. Opening a branch office

    To do this the foreign corporation must make an application for registration as an Extra-Provincial or Foreign Corporation in each province where the business intends to operate.

  2. Incorporating a Subsidiary

    To do this the foreign corporation must make an application for registration as an Extra-Provincial or Foreign Corporation in each province where the business intends to operate. province where the business intends to operate.

  3. For extra-provincial incorporation

    you will need an Agent for Service, an "individual, 18 years of age or older who is a resident in Canada, or a corporation having its registered office.

All Canadian provinces and territories have similar requirements. To start a business in Canada, you will need to contact the provincial registry of the province you want to do business with and go through its required procedure. If you wish to do business in more than one province, you will need to register your new business separately with each province.

Start a business without living in Canada

You can still start a company without living or immigrating to Canada. One must understand the rules about who can and who can't start certain types of businesses.

  1. Partnership

    partnership partner with a Canadian citizen and register your business as a partnership on the province or territory you wish to establish..

  2. Corporation

    At least 25 percent of the directors of a corporation other than a non-resident corporation shall be resident Canadians, but where a corporation has less than four directors, at least one director shall be a resident Canadian.

Therefore, if you are a Canadian citizen not living in Canada you will not qualify to be the sole director of a company. However, you can be a director as long as there are other directors elected to the board members (the 25% resident Canadian requirement). If a corporation has fewer than four directors, at least one of them must be a Canadian resident.

In addition, corporations operating in sectors are subject to ownership restrictions such as book retailing, video or film distribution. A company that does not follow the statutory requirements could be dissolved by Corporations Canada.

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On the other hand, not all provinces and territories have the same rules.

Directors Residency Requirements for companies/ corporations for each Canadian jurisdiction:

  • Jurisdiction

    Directors Residency Requirements

  • Federal (Canada)

    Atleast twenty-five percent of the directors of a corporation must be resident Canadians. However, If a corporation has less than four directors, at least one director must be a resident Canadian.

  • Alberta

    At least 1/4 of the directors of a corporation must be resident Canadians.

  • British-Columbia

    No Requirements

  • Prince Edward Island

    No Requirements

  • Ontario

    At least twenty-five percent of the directors of a corporation other than a non corporation shall be Canadians, but where a corporation has less than four directors, at least one director shall be resident Canadian.

  • Manitoba

    At least twenty-five percent of the directors of a corporation must be resident of Canada.If a corporation's board is compromised of three or fewer directors, one of them must be a resident of Canada.

  • New Brunswick

    No Requirements

  • Nova Scotia

    No Requirements

  • Nunavut

    No Requirements

  • Quebec

    No Requirements No in the actual Companies Act and not in the future Business Corporation Act is Quebec.

  • Saskatchewan

    At least twenty-five percent of the directors of a corporation must be resident Canadians. However, If a corporation has less than four directors, at least one director must be a resident Canadian.

  • Newfoundland/ Labrador

    At least twenty-five percent of the directors of a corporation must be resident Canadians. This does not apply to a bofy corporate that earns no income in Canada

  • Northwest Territories

    No Requirements

  • Yukon

    No Requirements

Directors are responsible for supervising the activities of the corporation and for making decisions regarding those activities.

DIRECTORS REQUIREMENTS

Must be at least 18 years old.

Must not have declared incapable under the laws of a Canadian province or territory, or by a court in a jurisdiction outside Canada.

Be an individual (a corporation cannot be a director).

Residency - Business Corporations Act, R.S.O. 1990, c. B.16 Resident Canadian means:

  1. A Canadian citizen is ordinarily resident in Canada.

  2. A Canadian citizen not ordinarily resident in Canada who is a member of a prescribed class of persons or

  3. A permanent resident within the meaning of the Canada Immigration and Refugee Protection Act and ordinarily resident in Canada.

Summary

Therefore, if you are a Canadian citizen not living in Canada you will not qualify to be the sole director of a company. However, you can be a director as long as there are other directors elected to the board members (the 25% resident Canadian requirement). If a corporation has fewer than four directors, at least one of them must be a Canadian resident.

In addition, corporations operating in sectors are subject to ownership restrictions such as book retailing, video or film distribution. A company that does not follow the statutory requirements could be dissolved by Corporations Canada. On the other hand, not all provinces and territories have the same rules.

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