OPERATING OUTSIDE OF ONTARIO – DO YOU NEED AN EXTRA-PROVINCIAL LICENCE?
AUGUST 2015 | AUTHOR: SARAH MACDONALD
In Canada, we have the option of incorporating as a provincial company or as a federal company. Typically the company does business in the province where it is primarily located. It is not necessary to incorporate several companies for each province (unless there are strategic tax or legal reasons), but it is necessary to register in those provinces where you are doing business.
If you are a federal company, although you will have a registered office location in some province of Canada, you will still need to register for and obtain an Extra-Provincial Licence in all provinces where you are located, even your “home” province. Contrary to popular belief, having a federal company does not provide you with the right to do business across Canada.
Each province and territory in Canada specifies that if you are “doing business” in that province, you will have to register for and obtain an Extra-Provincial Licence. There are some variations on the definition of doing business but they are generally the same in each province. The main indicators of doing business are:
A physical location (office building, rented space, retail outlet),
An employee (including those that work from home), or
A local phone number.
Selling goods online or entering into a contract with a resident of another province do not usually cross the “doing business” threshold on their own.
It should be noted that even if your corporate name is acceptable in Ontario, it may not be possible to register in another province with that same name. In Ontario you may use any corporate name you like as long as it is not identical to another Ontario company, but that will not reserve the name for you across Canada, and if there are existing similar or identical names in other provinces, that will not prevent use of that name in Ontario. If the name is rejected for being too similar to your own name, consent to use that name is required before the Extra-Provincial Licence can be issued.
Foreign entities are also subject to the requirement for an Extra-Provincial Licence when doing business in a Canadian province.
The rationale behind most public filing requirements for corporations revolve around serving lawsuits. Potential plaintiffs must be made aware of how they can properly serve documents on a defendant corporation. The Extra-Provincial Licence registration must show the registered office address, and a local agent for service. When a potential plaintiff wants to bring an action against the corporation, they can do a search of the local corporate registry and get the correct information for service. If you fail to register or provide false or misleading information, you can be subject to a fine under the applicable provincial business corporations’ statute. Failing to register properly will also prevent you from bringing your own action at a provincial tribunal, and in some provinces, will prevent you from owning land in that province.
If you have any questions relating to any of the above, please do not hesitate to contact Sarah MacDonald at smacdonald@kmblaw.com or 905.276.0416.
If you are a federal company, although you will have a registered office location in some province of Canada, you will still need to register for and obtain an Extra-Provincial Licence in all provinces where you are located, even your “home” province. Contrary to popular belief, having a federal company does not provide you with the right to do business across Canada.
Each province and territory in Canada specifies that if you are “doing business” in that province, you will have to register for and obtain an Extra-Provincial Licence. There are some variations on the definition of doing business but they are generally the same in each province. The main indicators of doing business are:
A physical location (office building, rented space, retail outlet),
An employee (including those that work from home), or
A local phone number.
Selling goods online or entering into a contract with a resident of another province do not usually cross the “doing business” threshold on their own.
It should be noted that even if your corporate name is acceptable in Ontario, it may not be possible to register in another province with that same name. In Ontario you may use any corporate name you like as long as it is not identical to another Ontario company, but that will not reserve the name for you across Canada, and if there are existing similar or identical names in other provinces, that will not prevent use of that name in Ontario. If the name is rejected for being too similar to your own name, consent to use that name is required before the Extra-Provincial Licence can be issued.
Foreign entities are also subject to the requirement for an Extra-Provincial Licence when doing business in a Canadian province.
The rationale behind most public filing requirements for corporations revolve around serving lawsuits. Potential plaintiffs must be made aware of how they can properly serve documents on a defendant corporation. The Extra-Provincial Licence registration must show the registered office address, and a local agent for service. When a potential plaintiff wants to bring an action against the corporation, they can do a search of the local corporate registry and get the correct information for service. If you fail to register or provide false or misleading information, you can be subject to a fine under the applicable provincial business corporations’ statute. Failing to register properly will also prevent you from bringing your own action at a provincial tribunal, and in some provinces, will prevent you from owning land in that province.
If you have any questions relating to any of the above, please do not hesitate to contact Sarah MacDonald at smacdonald@kmblaw.com or 905.276.0416.
This article is provided for general information purposes and should not be considered a legal opinion. Clients are advised to obtain legal advice on their specific situations.
