Considerations for Non-Residents
Starting a business in Canada as a non-resident can be a rewarding endeavor, but it comes with specific considerations and regulations that you need to be aware of. This article post will delve into two crucial aspects: the resident Canadian director requirement and the Investment Canada Act Notification. These elements are essential for successfully establishing a business in Canada.
Resident Canadian Director Requirement
One of the most significant considerations when starting a business in Canada is the requirement for a certain percentage of directors to be resident Canadians. According to the Canada Business Corporations Act, at least twenty-five percent of the directors of a Federal Canadian corporation must be resident Canadians, which can be either Canadian citizens ordinarily residing in Canada or permanent residents ordinarily residing in the country. However, if a corporation has fewer than four directors, at least one director must be a resident Canadian.
Residency
(3) Subject to subsection (3.1), at least twenty-five per cent 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.
Canada Business Corporations Act
Defining a Resident Canadian
A resident Canadian for the purposes of a Federal Corporation is a Citizen or Permanent Resident who normally resides in Canada.
resident Canadian means an individual who is
- (a) a Canadian citizen ordinarily resident in Canada,
- (b) a Canadian citizen not ordinarily resident in Canada who is a member of a prescribed class of persons, or
- (c) a permanent resident within the meaning of subsection 2(1) of the Immigration and Refugee Protection Act and ordinarily resident in Canada, except a permanent resident who has been ordinarily resident in Canada for more than one year after the time at which he or she first became eligible to apply for Canadian citizenship; (résident canadien)
Canada Business Corporations Act
This requirement has been evolving, and some provinces have started to eliminate the resident Canadian director requirement, making it easier for corporations with no resident Canadians to be established.
Investment Canada Act Notification
Investing in Canada as a non-Canadian involves a process governed by the Investment Canada Act. This act is designed to review investments in Canada by non-Canadians, particularly those exceeding a certain threshold. For smaller investments, typically under one billion CAD, including the establishment of a Canadian corporation, a notification is generally required. However, national security or cultural reviews may apply, especially if the business involves an acquisition.
Filling the notification is straightforward for typical cases. The link to the notification form can be found here and further details can be found on the Investment Canada website. If you need assistance you can reach out to the Investment Canada team and ask specific questions.
Investment Canada provides valuable information in their frequently asked questions (FAQ) section, which clearly outlines when you are required to file a notification. According to their guidelines:
When do I have to file a Notification? If you are a non-Canadian then you must file a notification each and every time you commence a new business activity in Canada and each time you acquire control of an existing Canadian business where the establishment or acquisition of control is not a reviewable transaction.
A Notification must be filed no later than thirty days after the implementation of the investment.
Understanding these considerations and complying with the regulations involved in starting a business in Canada as a non-resident is crucial for a successful establishment. Whether it's ensuring you have the required resident Canadian directors or following the Investment Canada Act Notification process, being well-informed is the first step toward achieving your business goals in the Canadian market.