Can a foreigner incorporate a company in Canada?

If you are a non-Canadian and want to incorporate a business in Canada, you may be wondering if a foreigner can incorporate a company in Canada.

The short answer is yes, a foreigner can incorporate a company in Canada as a sole shareholder or with another foreign shareholder. However, there are some requirements that must be met.

Incorporating a Business in Canada without a Canadian Partner

There are no restrictions on residency or citizenship of shareholder(s) under the Canada Business Corporations Act (to incorporate a federal company) or under the Corporations Act, Ontario (to incorporate an Ontario company). A non-Canadian can incorporate a company in Canada provided the following criteria are fulfilled.

Minimum Number of Canadian Residents as Directors

Every company must have the prescribed number of directors. For federal and Ontario companies atleast 25% directors should be resident Canadian or if the company has less than 4, then alteast one director must be a Canadian.

A director who is a Canadian citizen but does not normally reside in Canada can not fulfil this requirement. Resident Canadian means that the director should be domiciled in Canada and should have a Canadian address.

If a foreigner wishes to incorporate a company in Canada, the foreigner must appoint the required number of resident Canadian(s) as director(s).

Can a company or association be named as a Director?

No, a company cannot be appointed as a director of a company. The main qualifications of a director are:

  • must be an individual (not a corporation or group)
  • must be atleast 18 years old;
  • must not be declared incapable by a Canadian court or court in any jurisdiction outside Canada
  • must not be in bankrupt status

The Foreign Shareholder Notifying or Applying for Review under Investment Canada Act

When non Canadian foreigners wish to incorporate a company in Canada, they will have to notify Investment Canada’s Investment Review Division or apply for review by Investment Canada (if the investment or business assets are valued over the specified limits).

If the transaction is reviewable, the foreigner cannot incorporate the business or take control of Canadian business until the review is completed. Application for review should be made before taking control of Canadian business.

A notice of investment can be filed within 30 days of incorporating the business. If the information required to complete the notice of investment is complete, the director will issue a confirmation letter of notification and will confirm whether the investment is reviewable under Investment Canada Act.

Can foreigners apply for immigration if they incorporate a Company in Canada?

If a foreigner owns a Canadian company, it does not automatically guarantee an immigration status or benefit. The foreigner will have to go through the immigration process to apply for immigration. There are many programs like entrepreneur visa and start-up visa under Canadian Immigration programs, but these programs have strict requirements. You will need to consult an immigration lawyer to check how to qualify for the same.

In Conclusion

Where both director residency and Investment Canada Act requirements are met, a foreigner can successfully incorporate a business in Canada. To learn more about how to incorporate as a foreigner, contact us or book a free 30-minute consultation with us.