Extra-Provincial Corporations: Things to Know Before You Go

Nelligan O'Brien Payne gratefully acknowledges the contribution of Stéphane Serafin, Student-at-Law in writing this blog post.

In Ontario, the Extra-Provincial Corporations Act does not require Ontario and federal corporations to obtain a license before carrying out business in the province. In most other provinces, the general rule is that all corporations are required to complete some kind of registration when operating a business in a province or territory where they were not incorporated. Federal business corporations incorporated under the Canada Business Corporations Act are also subject to this rule in most Canadian jurisdictions.

Individual extra-provincial registration laws vary. In Quebec, for instance, the licence is called a registration declaration (déclaration d'immatriculation) and is subsumed within An Act Respecting the Legal Publicity of Enterprises. Although the general rule requires registration only where a corporation carries on a business in that jurisdiction, individual laws define this requirement differently.

In Quebec, for example, a registration declaration is required of these extra-provincial "legal persons" (i.e. corporations) "if they are domiciled in Québec, carry on an activity in Québec, which includes the operation of an enterprise, or possess an immovable real right, other than a prior claim or hypothec, in Québec".

Another issue involved with operating a business in a province or territory other than the province or territory of incorporation is name compliance. As mentioned in an earlier post, "Five Everyday Differences between Incorporating under the Ontario and Canada Business Corporations Acts", the reduction of name compliance issues is one potential advantage of incorporation under the Canada Business Corporations Act. Quebec stands as an exception in this regard, as the name search performed by federal authorities upon incorporation does not cover business names registered in that province.

As always, careful evaluation of the particulars of a business, and proper legal advice, are the only way to ensure proper compliance with each of these provincial laws. The consequences of improper compliance with extra-provincial registration usually involve a potential fine and an inability to commence proceedings in that jurisdiction. Once again, the particulars vary from one province or territory to the next. In Ontario, for instance, the fine is currently set at a maximum $2,000.00 for individuals, including directors, and $25,000.00 for the corporation itself.