Forming A Branch of Foreign Corporation in Canada
The Question and Concern:
We receive frequently questions “how to set up a branch of foreign corporation in Canada?”. Another common question is “as a foreigner and am not in Canada, can I form a corporation in Canada?”, “Can your company can do it”. Well, the answer is, as an incorporation agency, we are doing this almost every day. Clients from USA, China, Hong Kong, Dubai, India etc… are placing order. Either to open a Canadian Branch of their existing corporation in their country or making a new corporation in Canada. Let’s go the point straight.
Basic Understanding of Canadian Incorporating Process:
In Canada, you can incorporate provincially or federally. A provincial corporation as well as a federal corporation, both are considered as Canadian corporation. It may give a question, does it mean a provincial corporation can’t sell product or services outside of its province? So the answer is, can, a provincial corporation can do business all over in Canada from their head office in the incorporated province. However, if they want to establish a branch locally into another province, they may need to incorporate extra-provincial registration for that province. Therefore a Canadian corporation that is incorporated provincially is good enough to be a branch of foreign corporation.
Citizenship and Residency Rule:
In a corporation, individuals may have three important roles:
A per corporation rules, to form a Federal corporation, there is restriction applies on Director. The corporation’s director(s), minimum 25% of it (one director out of four) must be a Canadian citizen or permanent resident. Therefore, if you do not have a person who is Canadian Citizen or Permanent Resident, probably forming a Federal corporation not so great idea.
Most commonly people incorporate in the Province of Ontario, British Columbia and Alberta. For Ontario and Alberta, the rule of Canadian citizenship or permanent residency applies (minimum 25% of the directors must be either Canadian Citizen or Permanent Resident). Therefore, probably it’s also not great idea to form a Ontario corporation or Alberta corporation if you do not have a person who is Canadian citizen or permanent resident.
The Solution: BC Corporation:
Among all the provinces, British Columbia (BC) do not have the requirement of citizenship or permanent residency. All the directors, shareholder, officers can be non-Canadian citizen or non resident. Therefore if you do not have anyone as of Canadian citizenship or Permanent residency, probably forming a BC corporation is the best idea. Please note forming a provincial corporation requires to have a physical address in that province, in this case a physical address in BC (not PO Box) is required. It is used as corporation’s registered address where government sends documentations on time to time.
Those who do not have a registered physical address in BC, the good news is, our agency provides Registered Office Address service and mail scanning service for BC. When you proceed and click “Incorporate Now” under BC Corporation, in step 3 out of 12, on 2.1 you may choose. “I do not have a BC address” and then system will show you the right options.