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!
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.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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