Canada – greater management control for foreign investors

The Canadian provinces of Alberta and Ontario have removed the controversial residency requirement for managing directors and are now also accepting managing directors of a limited company without the residency requirement. This change gives foreign investors and companies more self-control over their management and the possibility of managing from abroad according to their structures.

When establishing a “limited” in Canada, compared to a GmbH, it was previously the case in Ontario and Alberta that at least one locally based managing director had to be appointed. This allowed Canadian partners, often law firms, to be critical, for which they were rewarded accordingly. In the past, this regulation made it difficult for many medium-sized companies to invest in these important provinces. The effort and risk of not finding the right external manager was too high.

With the changes, the following requirements apply to German companies with immediate effect:

• management of companies in Ontario Can be made entirely from Germany. The company’s registered office, however, must still be on site and the formation document as well as all necessary shareholder and director resolutions must be available at the company’s Canadian headquarters.
• the same is true in Alberta, However, the person authorized to receive mail must be a resident of Alberta and registered on the Commercial Register.

In both cases, it is a modernization of Canadian company law that allows foreign investors and corporations to control their Canadian businesses without outsiders. Important decisions are now possible without a Canadian on site.

With the new regulations in Alberta and Ontario, it will be easier to move Canadian subsidiaries out of Germany in the future – however, we recommend not giving up on Canadian support entirely, if only for reasons of compliance with Canadian law.

It’s always a good idea to have a knowledgeable expert on site to resolve unforeseen problems quickly. A suitable contact point for your business in Canada is vital for communication with banks and various authorities.

Are you looking to optimize your Canadian management structure due to the new legal status? Or have you always wanted to start a business in Canada?

We are your Canadian-German law firm for corporate law and we work for you on both sides of the Atlantic.

Feel free to contact us – we will build your bridge to Canada.