All Canadian businesses that are incorporated whether federally or provincially must complete an extra-provincial registration if they “carry on business” in a province other than the jurisdiction of incorporation. This means that even if your business is incorporated federally, it must be registered in the provinces in which it is considered to carry on business. Extra-provincial registration signifies that you are legitimately conducting business in a province outside of your business’ home jurisdiction. Each province has its own definition of “carrying on business” so it is important to evaluate whether your business meets the definition in a given province at the outset so that the appropriate paperwork and/or fees may be completed and submitted.
Under the Extra-Provincial Corporations Act, an extra-provincial corporation carries on its business in Ontario if,
- It has a resident agent, representative, warehouse, office or place where it carries on business in Ontario;
- It holds an interest, otherwise than by way of security, in real property situate in Ontario; or
- It otherwise carries on business in Ontario.
Under the same Act, an extra-provincial corporation does not carry on business in Ontario by reason only that,
- It takes orders for or buys or sells goods, wares and merchandise; or
- offers or sells services of any type,
by use of travellers or through advertising or correspondence.
Founders should keep in mind that if they are seeking to carry on business in a province other than the jurisdiction of incorporation, they are prohibited from identifying their business by a name that is the same as an existing business, trust, association, partnership, sole proprietorship or individual in that province. Determining whether a name is already in use can be established through a NUANS search which is a search system that compares a proposed corporate name with a database of existing corporate names in every province but Quebec. If the business is incorporated under a name that is already in use, then it may be registered under an assumed name which must be applied for and approved. Existing regulations also govern what words and expressions are prohibited from being used as or as part of a business name. Some examples include obscenities and words that suggest that the business is connected with the government or certain recognized professional associations without the consent of the relevant body.
It is well worth taking the time up-front to determine if you need to register in a given province. In Ontario, failure to comply with the registration requirements can lead to a fine of up to $2,000 for an individual or up to $25,000 for a Corporation. This is the kind of money that a startup cannot afford to lose in its early stages, so it is important to make a determination as to whether registration is required at the outset.