A company wishing to incorporate may choose to incorporate pursuant to the provincial statute of their home jurisdiction (for example, the Business Corporations Act of BC, referred to herein as the “Act”) or pursuant to the federal statute (the Canada Business Corporations Act). Companies are governed by the statute under which they incorporated. In addition, companies are legally required to comply with the terms of the statutes of the provinces in which they carry on business.
A company incorporated under the laws of a province other than BC (or federally) which operates in BC must register under the Act. Although the terminology and prescribed timeframes vary from province-to-province, this general rule stands true (subject only to an exemption from the Registrar of the relevant jurisdiction). However, the situations in which a company may be required to register in a province other than BC, will depend on the specific requirements of the legislation in place in that jurisdiction. Accordingly, a company must consider the laws of the relevant jurisdiction before deciding to carry on business in another jurisdiction.
As examples of the various rules regarding extraprovincial registration, please find below the relevant rules with regards to the provinces of BC and Alberta.
Section 375 of the Act requires a “foreign entity” (ie. a company incorporated under another statute) to register as an “extraprovincial company” within 2 months of beginning to carry on business in BC. A foreign entity is deemed “carry on business” in BC if:(a) its name, or any name under which it carries on business, is listed in a telephone directory: (i) for any part of BC; and (ii) in which an address or telephone number in BC is given for the foreign entity; (b) its name, or any name under which it carries on business, appears or is announced in any advertisement in which an address or telephone number in BC is given for the foreign entity; (c) it has, in BC; (i) a resident agent; or (ii) a warehouse, office or place of business; or (d) it otherwise carries on business in BC.
The Act states that a company is not carrying on business in BC if it is a bank, its only business in BC is constructing and operating a railway or it merely has an interest as a limited partner in a limited partnership carrying on business in BC.
Section 279 of the Business Corporation Act of Alberta requires an “extra-provincial corporation” to register within 30 days of commencing carrying on business in Alberta. An extra-provincial corporation is deemed to be “carrying on business” in Alberta if (see section 277):(a) its name, or any name under which it carries on business, is listed in a telephone directory for any part of Alberta; (b) its name, or any name under which it carries on business, appears or is announced in any advertisement in which an address in Alberta is given for the extra‑provincial corporation; (c) it has a resident agent or representative or a warehouse, office or place of business in Alberta; (d) it solicits business in Alberta; (e) it is the owner of any estate or interest in land in Alberta; (f) it is licensed or registered or required to be licensed or registered under any Act of Alberta entitling it to do business; (g) it is, in respect of a commercial vehicle as defined in the Traffic Safety Act of Alberta, the holder of a certificate of registration under the Traffic Safety Act of Alberta, unless it neither picks up nor delivers goods or passengers in Alberta; (h) it is the holder of a certificate as defined in section 130 of the Traffic Safety Act of Alberta, unless it neither picks up nor delivers goods or passengers in Alberta; or (i) it otherwise carries on business in Alberta.
Please note the broad scope of section 375(d) of the Act and section 279(i) of the Alberta legislation and, in particular, the general provision requiring registration if a company is “otherwise carrying on business” in one of those provinces. These sections grant significant discretion to courts to determine whether or not a company is carrying on business in BC or Alberta, as applicable. When in doubt, register!
Please also note that some jurisdictions (such as Manitoba) require companies to register prior to commencing carrying on business in the province.
The penalties for failing to extraprovincially register also vary from province to province. In BC, failing to extraprovincially register comes with a penalty of $100.00 per day. Additional potential consequences include, but are not limited, increased difficultly contracting with third parties, acquiring land or obtaining financing. Further, depending on the terms of existing agreements to which the company is a party, failure to extraprovinically register in accordance with the laws of the relevant jurisdictions may inadvertently put the company in default of its obligations under such agreements.
The process for registering as an extraprovincial company is relatively quick and easy. In most cases, the registration process can be completed within 1-3 days. Further, annual costs for maintaining an extraprovincial company are relatively inexpensive although it does generally require having an address for service in that jurisdiction which will often be another law firm. Accordingly, it is often prudent for a company to register as an extraprovincial company in every jurisdiction in which is does or intends to carry on business.
Please let us know if you have questions about extraprovincial registration requirements. We would be happy to answer any questions that you may have about your current or future operating situation.
Author: Danielle (Dani) Brito
This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or any of our lawyers practicing in the area of business law at the following:Una Gabie: email@example.com Jennette Vopicka: firstname.lastname@example.org Danielle (Dani) Brito: email@example.com Jaime M. Boyle: firstname.lastname@example.org