“Doing Business” – Untangling The Complicated Extra-Provincial Registration Requirements

I often get calls from clients asking what they require in order to do business in a particular province. Often these questions come from international clients who wish to do business in Canada, but we also have questions from businesses who operate in a particular province but wish to “do business” in another province.

Unfortunately, the quick answer is the dreaded “it depends”. Typically, to “carry on business” in a particular province in Canada, you need to be incorporated in that province or have a business license to operate in that province. If your company is already incorporated in a different jurisdiction (another province or foreign country), then you would need an Extra-Provincial License.

But what is considered “carrying on business”? Each province has legislation (whether their corporate statute or a specific extra-provincial corporations statute) that provides a definition of what is considered “doing business”.

For example, in Ontario, the Extra-Provincial Corporations Act says that an extra-provincial corporation (i.e. not an Ontario corporation) carries on business in Ontario if,

(a) it has a resident agent, representative, warehouse, office or place where it carries on business in Ontario;
(b) it holds an interest, otherwise than by way of security, in real property situate in Ontario; or
(c) it otherwise carries on business in Ontario.

Of course, subparagraph (c) is the dreaded catch-all provision.

The statute goes on to say that an extra-provincial corporation does not carry on its business in Ontario by reason only that

(a) it takes orders for or buys or sells goods, wares and merchandise;
(b) offers or sells services of any type,

by use of travellers or through advertising or correspondence.

Each province has its own definition of what is considered “doing business”. There is no hard and fast rule and each situation must be analyzed to determine if an Extra-Provincial License is appropriate.

The process (and disbursement costs) for obtaining an Extra-Provincial License in each province varies as well.