At Sodagar & Company, we recognized early on that Canada has wide business appeal internationally. We provide strategic advice to international and US clients wanting to establish a presence in Canada. While there are many legal business structures available to foreign businesses wishing to conduct business in Canada, corporations are often the preferred vehicle for most businesses. Foreign businesses can incorporate a subsidiary corporation for their Canadian operations, either federally or provincially.
Both federal and provincial legislation provides for the incorporation and regulation of corporations. Depending on the business objectives, those establishing a corporation can choose which statute they prefer. A company is incorporated federally under the Canada Business Corporations Act (“CBCA”). In British Columbia, the governing legislation is the Business Corporations Act (“BCBCA”). For the most part, the governing legislation (BCBCA and CBCA) prescribe mostly the same requirements, with some notable exceptions:
- Corporate names protection and registration: Under the CBCA, a federal corporation has the right to carry on business under its corporate name in any province of Canada, although it may be required to register in a province in which it does business. Under the BCBCA however there is no such entitlement. A British Columbia corporation registering in another province cannot be registered under its name if that name is already being used there by another corporation. Both federally and provincially incorporated companies must fulfil the registration requirements of every province in which they carry on business.
- Residency requirements: The CBCA requires at least 25% of directors to be Canadian residents. If a corporation has fewer than four directors, at least one director must be a resident Canadian (except for certain business sectors and corporations subject to federal ownership restrictions). The BCBCA has no residency requirements for directors or for directors’ committees.
- Flexibility on changes to a company’s articles. Under the BCBCA, levels for various shareholder approvals, other than those prescribed by the legislation, can be set in a corporation’s articles. The CBCA however, does not provide such flexibility on shareholder approvals.
A foreign business may carry on business in Canada by setting up a new corporation as a subsidiary or through a branch of an existing foreign corporation. The choice often is based on tax considerations and business objectives. Please contact us to see how we can be of service to your business objectives.