Can a non-resident corporation buy a Canadian business’s assets without a local entity?

A better question than whether a local entity is required is which filings follow from the buyer being a foreign corporation. Three sets of rules answer it: the federal investment regime, provincial corporate registration, and tax registration. This page sets out what each says on its face. Whether a Canadian subsidiary makes sense is a structuring decision for counsel.

Federal investment rules

The Investment Canada Act applies to all non-Canadians who acquire control of an existing Canadian business or establish a new one. Those investors must submit either a notification or an application for review unless an exemption applies, and the government can review investments of any size on national security grounds. Which route applies depends on thresholds that the federal department publishes and updates, and whether an asset purchase amounts to acquiring control is a question for counsel. Our page on foreign buyers sets out the wider picture.

Provincial registration

Provinces run a separate registration route for corporations formed elsewhere. Alberta’s registry lists an extra-provincial corporation registration that asks for certified copies of the corporation’s charter documents from its home jurisdiction and a notice of agent for service, and Saskatchewan and Newfoundland and Labrador also list extra-provincial registration. Whether your activities require registration is set by each province’s corporate statute, so check the province where the business operates.

CRA accounts

The CRA’s guidance on changes to a corporation’s owners and directors sends businesses incorporated or formed outside Canada to a separate non-resident registration process. That suggests a foreign buyer’s tax accounts are set up differently, so ask your accountant which CRA program accounts the buyer will need and whether they must be in place before closing.