Foreign companies have several structures to choose from when deciding to establish a presence in Canada. Among these, the branch office and the subsidiary are the most common, however, there is also the possibility of setting up representative/liaison offices, according to the Canadian law.
Compared to other countries, most of the times it is banks that set up liaison offices in Canada, which is why the Banking Law is the main legal document providing for the establishment of such form of doing business. Our Canadian company formation agents can explain the requirements for setting up a representative office.
What is the Canadian liaison office?
Compared to the branch or the subsidiary, the liaison office does not allow a foreign company to carry out commercial activities in Canada; however, there are many companies and banks in foreign countries which set up representative offices here in order to have a contact point between the Canadian customers and the foreign company located overseas.
The Canadian liaison office is usually set up before the parent company decides to register a subsidiary or branch office here. The representative office will first prospect the market and even promote the services of the foreign company.
Foreign companies interested in setting up their presence on the local market can rely on our company registration advisors in Canada.
Types of representative offices in Canada
The Canadian law provides for the following types of liaison offices:
- diplomatic mission;
- international organizations;
- consular missions;
- special representative offices;
- foreign banks’ liaison offices.
Our local consultants can offer information on the types of representative offices which can be set up in this country.
How to establish a representative office in Canada
Even if starting a business in Canada implies filing several documents with Corporations Canada, the country’s Trade Registrar, in the case of a representative office the requirements are less strict. The parent company will be required to file information like:
- specific application forms;
- its certificate of incorporation;
- the document appointing a local representative agent;
- information about the representative agent.
How can one set up a banking representative office in Canada?
If you operate in the banking industry and you want to set up a representative office in Canada for your business, you will need to comply with the local regulations concerning the incorporation of this entity.
In the list below, our consultants in company registration in Canada have highlighted some of the main aspects you should be aware of:
- the registration and operation of the entity must be done as per the rules of the Foreign Bank Representative Offices Regulations SOR/92-299;
- the latest modifications of the law were imposed since June 1, 1992;
- the law states that the liaison office in Canada is required to pay an annual fee before November 1st of each financial year;
- the value of the fee is of $2,500 and this fee has to be paid for each representative office in Canada that was set up by the foreign company.
What documents are necessary to set up a banking liaison office in Canada?
Foreign investors must prepare many documents, which are customarily asked when starting the process of company formation in Canada for a commercial company. In the list below, we invite you to discover some of the main documentation you must submit:
- the details of the foreign bank (the parent company), such as headquarters, corporate name, etc.;
- information on the bank’s activities and operations;
- the proposed/established address for the representative office in Canada;
- the name of the person who is appointed to act as the legal representative of the liaison office;
- a list of the activities that the appointed person is in charge with;
- information concerning the employment arrangements made for the liaison office.
During the process of company registration in Canada, investors are required to present the audited financial statements of the foreign bank, from the previous financial year. The company must submit its balance sheet and the statement of income and expenses.
Please know that the numbers have to be presented in Canadian dollars. Along with these documents, investors must submit the decision to establish a representative office in Canada (signed by the board of directors of the foreign bank).
Once the entity becomes active, during its activity, various modifications can occur. When this happens, any of the changes regulated by the Canadian law have to be reported to the Canadian officials. This does not take into consideration only the liaison office, but the parent company as well.
Any changes regarding the person appointed as a representative must also be reported. The law states that the Canadian authorities (Office of the Superintendent of Financial Institutions) must be informed in a period of maximum 1 month from the appointment. The information has to be made in writing.
For other details concerning the list of documents that must be included in the application file, we invite you to address our consultants in company formation in Canada, who can represent you during this stage, as well as in other stages related to the registration/operation of the office.
What are the minimum annual obligations of the Canadian office?
As presented above, the liaison office is required to pay a yearly fee and this applies to each of the liaison offices operating in Canada, if this in the case. Beside this, the office is required to provide accurate information on the current number of employees.
From an accounting point of view, the representative office in Canada is legally required to submit the financial statements of the foreign bank (the audited version). The procedure must be conducted on a yearly basis and it must be done once the foreign bank issues its financial documents.
In the case in which the audited financial statements are not ready by the time when the representative office must submit the documentation in Canada, the unaudited version can be submitted (Article 9.(2)).
Please feel free to contact us if you are interested in starting a company in Canada.