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EXTRA-PROVINCIAL CORPORATIONS
1. Introduction
The Extra-Provincial Corporations Act, 1984, S.O. 1984, c. 14 [now the
Extra-Provincial Corporations Act, R.S.O. 1990, c. E.27] (‘‘EPCA’’) repealed
Part VIII of the Corporations Act which formerly governed the registration of
corporations incorporated outside Ontario that wanted to carry on business
here. Some of the highlights of the legislation are:
□ corporations incorporated in Canada are exempt from licensing requirements;
□ restrictions on the use in Ontario of names of corporations incorporated
outside the province;
□ corporations incorporated outside Canada that decide to carry on business
in Ontario must obtain an extra-provincial licence;
□ corporations governed by this Act are divided into three classes.
Regulations made under this Act, issued as R.R.O. 1990, Reg. 365, as amended,
set out the prescribed forms that must be filed by applicants.
2. Classes of Extra-Provincial Corporations
Subsection 2(1) of the EPCA divides all corporations into three classes:
Class 1. Corporations incorporated or continued by or under the authority of an
Act of a legislature of a province of Canada.
Class 2. Corporations incorporated or continued by or under the authority of an
Act of the Parliament of Canada or of the legislature of a territory of
Canada.
Class 3. Corporations incorporated or continued under the laws of a jurisdiction
outside of Canada.
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Corporations incorporated under an ordinance of the Northwest Territories or
of Nunavut but governed by the corporate laws of a province of Canada are
included in Class 1 (subsection 2(2)).
Subject to the terms of this statute, the Corporations Information Act and
any other Act, an extra-provincial corporation in Classes 1 and 2 may carry on
business in Ontario without a licence. Such extra-provincial corporations must
file an Initial Return, Form 2, under the Corporations Information within 60
days of commencing business in Ontario. Effective April 1, 2000, Companies
Branch policy required that the Initial Return be accompanied with a photocopy
of the page of the most recent Articles, containing the correct name and
incorporation/amalgamation date, filed with the jurisdiction to which the corporation is subject.
Only corporations incorporated under the laws of a foreign jurisdiction
(i.e., any other country in the world) must obtain an extra-provincial licence
to do business in Ontario (see Form 11.1). Subsection 4(2) of the Act states
that an agent or representative of such an extra-provincial corporation cannot
carry on any of its business unless the corporation has a licence.
Every non-Canadian corporation licensed under the Act must under section
19 ensure the continuing appointment of an agent for service in Ontario. This
agent must be an Ontario resident aged 18 or older or a corporation having its
head or registered office in Ontario. The appointment is made by filing the
prescribed Form 2, Appointment of Agent for Service/Revised Appointment
for Service (see Form 11.2). This is a dual form used on the original appointment and for notifying the public of any changes in any of the particulars set
out in that document. Subsection 19(3) requires the filing forthwith of a revised
appointment in the prescribed form where, for example, the agent’s address
changes or a new agent is substituted. A Class 3 extra-provincial corporation
that has not obtained a licence or appointed an agent for service cannot, under
section 21, maintain an action in Ontario courts. When the default is corrected,
the action may proceed in the courts as if such default had been corrected
before the institution of the court action or other proceeding. Section 20 of the
Act provides penalties for persons or corporations who contravene this Act,
its regulations or a condition of a licence. Failure to comply with an order or
direction made under the Act or its regulations may give rise to fines as well.
On conviction a person is liable for a fine to a maximum of $2,000 and a
corporation to a fine not to exceed $25,000.
If a non-Canadian, or Class 3, extra-provincial corporation
□ changes its name,
□ is ordered to change its name under section 11 of this Act, or
□ is continued under the laws of another jurisdiction,
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then it must under subsection 12(1) apply for an amended licence, using
prescribed Form 3, Application for Amended Extra-Provincial licence (see
Form 11.3).
Subsection 12(2) states that when a Class 3 extra-provincial corporation
has not carried on any of its business in Ontario for two consecutive years, it
shall terminate its licence by filing prescribed Form 4, Application for Termination of Extra-Provincial Licence (see Form 11.4). The Director has the
power under this subsection to order the cancellation of the licence after giving
the extra-provincial corporation an opportunity to be heard.
In addition the Director has the power under section 7 to cancel the licence
of a Class 3 non-Canadian corporation for sufficient cause after the corporation
has had an opportunity to be heard. The term ‘‘sufficient cause’’ in this section
includes:
(a) failure to pay any prescribed fee;
(b) failure to comply with section 19;
(c) failure to comply with a filing requirement under the Corporations Information Act,
(d) a conviction . . . under the Criminal Code (Canada) or . . . the Provincial
Offences Act whereby cancellation of the licence is in the public interest.
Section 22 of this Act provides that every corporation that is
□ within Class 1 or 2,
□ a licensed Class 3 corporation under this Act, or
□ exempt from licensing under this Act,
has the power to acquire, hold and convey any land or interest in land in Ontario
necessary for its actual use and occupation or for carrying on its business.
Prior to March 1, 1985, the proclamation date of the EPCA, licences had
been issued to foreign or non-Canadian corporations under Part VIII of the
Corporations Act (or a predecessor thereof). Licences were also issued to extraprovincial corporations incorporated in other provincial jurisdictions in Canada
under the same legislation. Section 23 of the EPCA provides that licences
issued to non-Canadian corporations under Part VIII of the Corporations Act,
or a predecessor statute:
□ remain in effect and are deemed to have been endorsed under this Act;
□ restrict the powers of these extra-provincial corporations to the extent set
out in the licences; and
□ retain the previously appointed attorney for service who must operate under
the relevant provisions of this Act.
All other extra-provincial licences issued under Part VIII of the Corporations
Act (or a predecessor thereof) were cancelled on the day this section came into
force.
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Subsection 24(1) provides that references in other statutes to an extraprovincial corporation, unless the context otherwise requires, are deemed to
refer to extra-provincial corporations under this Act. A reference to an extraprovincial corporation that is licensed or required to be licensed under Part
VIII of the Corporations Act means a Class 1 or Class 3 corporation under this
Act.
Subsection 24(2) states that where a Class 1 or Class 2 corporation would,
if licensed under this Act, receive a benefit or exemption under another statute,
that corporation shall be deemed to have a licence for the purpose of the other
statute or Act.
The initial decision to be made is whether or not the extra-provincial
corporation is, in fact, carrying on business in Ontario. The definition of extraprovincial corporation in this Act includes a corporation, with or without share
capital, incorporated or continued otherwise than by or under the authority of
an Act of the Legislative Assembly of Ontario (subsection 1(1)). An extraprovincial corporation is deemed, for the purposes of this Act, to carry on its
business in Ontario if:
□ it has a resident agent, representative, warehouse, office or place of business
in Ontario;
□ it holds an interest in or owns real property in Ontario, otherwise than by
way of security;
□ it otherwise carries on its business in Ontario (subsection 1(2)).
An extra-provincial corporation does not carry on business in Ontario by reason
that:
□ it takes orders for or buys or sells goods, wares and merchandise, or
□ it offers or sells services of any type
through the use of travellers or through advertising or correspondence (subsection 1(3)).
3. Name Clearance
Once it has been decided that the extra-provincial corporation falls within
the definition of carrying on business in this Act, the next step is to check its
corporate name to see if it can be used in Ontario. There is no informal preclearance of names of extra-provincial corporations available. Under the BCA
the onus is on incorporators to check the availability of the proposed corporate
name. The responsibility for checking the corporate name for use in Ontario
is assumed by the corporation that wants to do business in Ontario, provided
it falls within the Class 1 definition in this Act.
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A Class 2 corporation, that is a federal corporation, has the right by federal
statute to carry on business in any province in Canada under its corporate name.
A Class 3 corporation, that is a foreign or non-Canadian corporation, is
required under Reg. 365 to file an original NUANS Ontario-biased search
report, dated not more than 90 days prior to the submission date of the application for an extra-provincial licence (see Chapter 13, heading 3.(a) for more
on the NUANS system).
It would be advisable for all extra-provincial corporations to order a
NUANS Search Report in order to avoid the possibility of contravening the
provisions of section 10 of this Act. This section sets out certain prohibitions
on the use of a name in Ontario, for example:
□ it cannot contain a word or expression prohibited by the regulations;
□ it cannot be the same or similar to the name of a known body corporate,
trust, association, partnership, sole proprietorship or individual, whether in
existence or not, if the use of the name would be likely to deceive;
□ it cannot be the same or similar to a name or business style by which any
of the above forms of business ownership identifies itself to the public, if
the use of the name would be likely to deceive; or
□ it must meet the requirements prescribed by the regulations.
Section 11 provides that the Director may, after giving the extra-provincial
corporation an opportunity to be heard, order it to cease using a name that is
contrary to the provisions of section 10, whether the use of the name is inadvertent or otherwise.
If there is an Ontario or other corporation carrying on business with a
name similar to that of the extra-provincial corporation, a Class 3 corporation
may encounter problems in becoming licensed in Ontario. The similar name
or names would be revealed in the NUANS Search Report and the Director
could refuse to endorse the application as filed. The use of the same or a similar
name could very likely confuse or deceive the public and this may be sufficient
grounds for refusing to endorse the application. The Director is required under
section 6 to give written notice of the refusal, and the reasons therefor, to the
person who delivered the application.
Section 9 of this Act states that an extra-provincial corporation may,
subject to the Corporations Information Act and any other Act, use and identify
itself in Ontario by a name other than its corporate name. Previously, a Class
3 extra-provincial corporation could be licensed to use such a name. In other
words the extra-provincial corporation could either carry on business, or apply
to be licensed, using a name or business style. It could, for example, operate
its business or be licensed as ‘‘National Advertising Agencies Inc. carrying on
business in the Province of Ontario as Adnat Services’’. Effective March 27,
2000, such foreign corporations can no longer be licenced with a business
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name. They can only be licensed under their corporate name. However, they
an carry on business under their business name provided that name is registered
under the Business Names Act.
Although a Class 1 extra-provincial corporation avoids licensing problems, the use of the same name as, or a name similar to, an existing corporation
operating in Ontario could result in difficulties in the future. There is provision
for a letter of objection that can be sent by the known business or corporation
to the Legal Section of the Companies Branch. This letter should contain the
facts on which the objector is relying, including any examples of actual deception in the public mind that the objector knows about. Supporting legal arguments can also be noted in this letter of objection. By permission, a copy of
the formal objection is sent directly to the extra-provincial corporation involved
to obtain its comments on the issues raised. Letters to the Ministry of Consumer
and Business Services are copied by the writers to the other parties so that
there is both full disclosure and exchange of information. Once the issues have
been defined through correspondence, a decision is made as to whether or not
a hearing should be held. If a hearing is not held, a letter is sent from the Legal
Section of the Companies Branch providing reasons for the decision and
informing the objector of its right of appeal to the Divisional Court pursuant
to section 8 of this Act.
If a hearing is to be held, the hearing shall be in writing in accordance with
rules made by the Director under the Statutory Powers Procedure Act, R.S.O.
1990, c. S.22. The decision of the Director will be forwarded in writing to both
parties. Both parties are informed of their right to appeal to the Divisional
Court. Under section 11 of this Act, the Director could order the extra-provincial corporation to cease using its name. This could result in a loss of business
and additional costs involved in finding a new suitable name under which it
can carry on business.
4. Class 3 Applications
A foreign or non-Canadian corporation may apply under section 5 of this
Act to be licensed as an extra-provincial corporation. Applications can also be
filed for an amended licence or a termination of a licence. The Director endorses
the two originals of the application, signed by a director or officer of the
corporation, setting out the day, month and year of endorsement and a corporation number. The Director then:
□ files one original of the application with the endorsement; and
□ returns one original of the endorsed application to the corporation or its
representative.
The application can be endorsed with the date on which the application,
any other required documents and the prescribed fee were received by the
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Director. Alternatively, the person who submitted the application can request
a later date and, provided the Director agrees, this later date can be endorsed
on the application.
5. Application for Extra-Provincial Licence
In order to be licensed, an extra-provincial corporation must submit the
following to the Companies Branch:
1. Form 1 — Application for Extra-Provincial Licence, in duplicate, properly
completed and executed by a director or officer of the corporation.
2. Form 2 — Appointment of Agent for Service, in duplicate, and executed
by the corporation and the person or other corporation who will act as an
agent.
3. A Certificate of Status signed by the proper officer, that is the Director,
Corporations Branch, of the original jurisdiction in which the applicant
was incorporated or continued.
4. A cheque for the prescribed fee payable to the Minister of Finance. The
name of the corporation should appear on the face of the cheque.
5. The original NUANS Search Report dated not more than 90 days prior to
the submission date of the application.
6. Application for Amended Extra-Provincial Licence
This application would be filed where a Class 3 extra-provincial corporation, through inadvertence or otherwise, has contravened the provisions of
section 11 by using a name that is contrary to section 10. The Director can
order the corporation to apply for an amended licence. Alternatively where a
Class 3 extra-provincial corporation has changed its name in its home jurisdiction, or been continued under the laws of another jurisdiction, an application
for an amended licence shall, under section 12 of this Act, be filed. The
following must be submitted to the Companies Branch to obtain the required
amendment to the licence:
1. Form 3 — Application for Amended Extra-Provincial Licence, in duplicate, properly completed and executed by a director or officer of the
corporation.
2. A Certificate of Status signed by the proper officer (the Director, Corporations Branch) of the original jurisdiction in which the applicant was
incorporated or continued.
3. The original NUANS Search Report dated not more than 90 days prior to
the submission date of the application.
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4. A cheque payable to the Minister of Finance for the prescribed fee. The
name of the corporation should appear on the face of the cheque.
Where the Director has ordered an amended licence, the application for the
amended licence must be submitted within the time period specified in the
order. Presumably if the extra-provincial licence restricted the powers of the
corporation and a change was deemed necessary, Form 3 would be filed along
with the prescribed fee.
7. Application for Termination of Extra-Provincial Licence
Pursuant to subsection 12(2), where a Class 3 extra-provincial corporation
has not carried on any of its business in Ontario for any two consecutive years,
it is required to make application for termination of its licence or, if it does not
do so, the Director, upon giving the corporation a chance to be heard, may by
order cancel the licence.
Form 4, Application for Termination of Extra-Provincial Licence, must
be prepared and executed in duplicate by a director or officer of the corporation
under seal. If the original jurisdiction to which the corporation is subject does
not require corporate seals, this must be indicated when submitting the application.
8. Signatures on Documents
All signatures on applications submitted to the Companies Branch must
be original signatures. The counter staff test documents when they are presented if there is any question that the signatures are not originals. Applications
with photocopied signatures will not be accepted.
9. Forms on the Internet
The Extra-Provincial Corporations Act forms are available on the Ministry
of Consumer and Business Services website (www.cbs.gov.on.ca). The forms
can be accessed by selecting the ‘‘Business Information’’ button on the Ministry’s home page. The forms can be completed online, and then print the
completed forms. Alternatively, a blank form can be printed and subsequently
completed.
10. Certificates
Regulation 365 requires that a fee be charged for certificates for each
corporation. The Companies Branch issues the following certificates of status
for extra-provincial corporations:
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□ a certificate that certifies that the extra-provincial corporation named is
licensed under the EPCA; and
□ a certificate that states that the corporation named is not required to be
licensed in Ontario. This certificate states:
This certifies that according to the records of the Companies Branch (insert name
of corporation), Ontario Corporation Number (insert number), is a corporation of
(state original jurisdiction, i.e., Canada/Alberta) and is not required to be licensed
under the Extra-Provincial Corporations Act of Ontario.
Each certificate is dated and signed by the Controller of Records for the
Companies Branch.
11. Initial Return — Corporations Information Act
Section 2 of the Corporations Information Act requires that every extraprovincial corporation must, within 60 days after the date it begins to carry on
business in Ontario, file an initial notice with the Minister. This notice must
set out the prescribed information as of the date of filing
Form 2, Initial Return/Notice of Change is a prescribed, dual form and,
when first filed by an extra-provincial corporation, it is described as an initial
return. (The second and subsequent filings are made as Notices of Change.
Subsection 4(1) of the Corporations Information Act requires the filing of a
Notice of Change for every change in the information filed in the Initial Return.
This Notice of Change is required to be filed within 15 days after the change
takes place.)
The Companies Branch advises that all extra-provincial corporations exempted from licensing under the Act must file Form 2 as an Initial Return in
order to obtain an Ontario Corporation Number. Class 1 and 2 extra-provincial
corporations should complete this filing before commencing business in Ontario. This was the only method through which the Companies Branch learned
about Class 1 and 2 extra-provincial corporations that were doing business in
Ontario. If, however, corporations fail to file an Initial Return, users of the
computer search system who cannot locate any record of a particular extra
provincial corporation can inform the Companies Branch. Steps can then be
taken to request compliance with this filing requirement.
Effective January, 2000, corporations now are required to file Annual
Returns. The Annual Return is combined with the CT23 Corporations Tax
Return and are to be filed together. Schedule K is used for extra-provincial
corporations licensed under the Extra-Provincial Corporations Act. The Class
1 and Class 2 corporations use Schedule A to the Annual Return.
Section 6 of the Act provides for special filings and the provisions of this
section were used by the Companies Branch to update corporate information
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on file for the database being created for ONBIS (see Chapter 4). All extraprovincial corporations carrying on business in Ontario were required to make
these filings and pay the prescribed fee. Ontario does not require payment to
register, does not require a local agent for service, and provides a number for
use by the Ministry of Finance, Corporations Tax Branch. All other Canadian
jurisdictions, the Companies Branch advises, require extra-provincial corporations to pay a registration fee.