Nominee and Resident Director in Canada
Updated on Tuesday 10th August 2021
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Investors who want to open a company in Canada will need to comply with numerous legal requirements for their newly-founded company, and this also refers to the nominee director and the resident director of the legal entity. The legal requirements imposed on companies in Canada vary depending on the Canadian jurisdiction where the company is set up.
If you need assistance on the obligations of the nominee and resident director in Canada, we invite you to address to our team of consultants. Our team of Canadian company formation specialists can help you register a company in any of the Canadian jurisdictions and can offer you full advice on how to appoint directors.
What are the obligations of a nominee and resident director in Canada?
The nominee and resident director in Canada are persons who have as a main responsibility supervising the activities of the company, with the purpose of taking the most suitable decisions that are in the best interest of the company. As a general rule, a company in Canada must have at least one director, but the minimum number of directors, including for the nominee director in Canada, can be influenced by the legal entity under which the company will operate.
However, the number of directors is not fixed, as it can be modified by amending the company’s statutory documents. If this applies, then the company must reflect the new modifications with the official institutions, according to the Government of Canada. With regards to the minimum requirements a Canadian director should meet, we mention the following:
- the resident director or the nominee director in Canada must have an age of at least 18 years old;
- in most of the Canadian jurisdictions, the legislation on directors and nominee directors imposes residency requirements, in the sense that at least 25% of the directors must have Canadian residency, but starting with July 2021, this requirement no longer applies in the province of Ontario - here, the directors of Ontrio companies do not have to meet any residency requirements;
- at a national level, in companies with less than 4 directors, at least 1 is required to have Canadian resident, but in the province of Ontario, under the new law of 2021, this is also a requirement that local companies do not have to abide by, - however, the residency requirements may apply in certain situations;
- provided that the board of directors of companies operating in special industries, such as video sales or video distribution, is formed of 2 directors, is it compulsory that at least 50% to be represented by Canadian residents;
- in the case of a nominee director in Canada who has been elected by the shareholders’ meeting and who is not present at the meeting at the respective moment it is compulsory to provide a written consent on the election in a period of maximum 10 days since the decision was taken.
The obligation to have a board of directors with at least 25% Canadian residency was imposed on the following Canadian jurisdictions: Federal Canada, Alberta, Manitoba, Saskatchewan and Newfoundland; however, the law that entered into force starting with July 2021 eliminated the residency requirements for the directors of Canadian companies that are registered in the province of Ontario; for all other Canadian provinces, the residency requirements still apply. Our team of consultants in Canadian company formation can present more details on this aspect if you want to invest in any of these regions, but you can rely on our team if you need information on how to start a business in other Canadian regions, such as Quebec or Nova Scotia.
What is a nominee director in Canada?
A nominee director in Canada is a person that is appointed to act as the director (or one of the directors) of the company by one of the company’s shareholders. The nominee director in Canada can be one of the company’s employees as well. It must be noted that even if the nominee director is appointed by one of the shareholders, the director has fiduciary obligations towards the entire shareholding structure of the company, and not the person who has made the nomination. As a general rule, some of the main attributions of the nominee director in Canada are the following:
- overseeing the company’s operations and making sure that the company’s policies are implemented as required;
- the nominee does not represent an executive director, but he or she must be involved in the decision making process, with regards to specific areas of the company;
- the nominee director in Canada is also required to maintain the confidentiality of the documents to which he or she has access to;
- here, it must be noted that if the director has access to confidential documents, then he or she should not disclose such details to his or her nominating shareholder, it the respective information does not have to be disclosed with the respective shareholder;
- the nominee director is still allowed to consult with his or her nominating shareholder in various corporate matters.
If you need more information on how to appoint a nominee director in Canada, please contact our team. Our consultants in company registration in Canada can help you in the process of appointing resident directors and can offer more details on the management structure of a Canadian company.