With the growth of the globalization phenomenon in recent years, many Quebec corporations are no longer content to carry out on their activities only where they are situated and they now commonly conduct business outside Quebec. It goes without saying that if your firm wishes to conduct business in a foreign country undoubtedly certain formalities will apply in that country; but what if your firm conducts business in Canada in a province1 other than Quebec? Have you taken the time to make sure your corporation can legally carry out its activities there?
The basic principle in most Canadian provinces is that if a foreign corporation, whether it is a corporation incorporated in a foreign country or in another province of Canada or under the Canada Business Corporations Act, conducts business in the province, then it must register itself with the competent governmental authorities of the province. Quebec applies the same rule and requires that such a corporation be registered with the Registraire des entreprises.
But how does one know if his firm conducts business in another Canadian province within the meaning of the law? This notion may appear to be obvious at first and yet it is broader than what you might imagine and it may differ slightly from one province to the next. More particularly, your corporation may be deemed or presumed to carry out business in a Canadian province other than Quebec if it has an establishment, a representative or a warehouse there, if its name appears in an advertisement that mentions an address in the province, if it holds a permit that gives it the right to carry out activities in the province, if it solicits there, if it owns a building or land in the province, or if its telephone number appears in a telephone book in the province.
When a corporation is required to register in another province, it must do so within a certain period of time following the commencement of its activities in that province. Generally, governmental fees apply and various documents and information must be provided. Once it is registered, generally the corporation must file an annual declaration and pay annual governmental fees in order to maintain its registration in the province. The corporation may also be required to designate an authorized representative having an establishment in the province to receive service of any legal proceedings instituted against it in the province.
What are the impacts if your corporation conducts business in a Canadian province without being registered there when the law of that province requires that it be registered? Generally, there are two possible consequences: in addition to running the risk of being fined, the corporation may find itself unable to go to court before the courts of the province in question.
Since the necessity to register and the registration conditions vary from one province to the next, we recommend that you be diligent and check with competent professionals whether your corporation is conducting business outside Quebec. If there is any doubt, prevention is the best approach!
Footnote
Note to readers: please read the word "province" so as to include Yukon, the Northwest Territories and Nunavut.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
