By Sharad Gondaliya, CPA
Some non-resident founders incorporated federally before they knew about the 25% resident director rule. Others had a resident director who resigned, moved away or passed away. If that is your situation, you do not have to close the company and start over. You can continue the federal corporation into Ontario, where a non-resident can be the sole director.
Open Corporation for $35 is a department of Gondaliya CPA.
What continuance means
Continuance moves a corporation from one governing law to another. The corporation stays the same legal person. It keeps its assets, contracts, liabilities and history. Only the corporate statute changes, from the federal Canada Business Corporations Act to Ontario’s Business Corporations Act.
Why owners do it
- Drop the resident Canadian director requirement and its yearly cost.
- End a nominee’s personal liability exposure going forward.
- Keep beneficial ownership information in a private register instead of a federal filing that is partly public.
- Deal with one corporate registry instead of two.
The steps
- Shareholder approval. Shareholders pass a special resolution, at least two-thirds of the votes cast, authorizing the continuance.
- Letter of Satisfaction from Corporations Canada. The corporation applies for a Letter of Satisfaction. It must be in good standing, which means its federal annual returns are filed. The fee is $200 online. The letter is valid for 90 days.
- Ontario name check. A named corporation needs an Ontario NUANS report. A numbered corporation receives an Ontario number.
- Articles of Continuance in Ontario. We file them with the Ontario Business Registry, with the Letter of Satisfaction. The Ontario fee is $330.
- Discontinuance federally. The Ontario certificate is sent to Corporations Canada, which issues a Certificate of Discontinuance. The corporation is then governed only by Ontario law, and it files an Ontario Initial Return within 60 days.
- Remove the resident director. After continuance, the resident director can resign or be removed. File a Notice of Change within 15 days.
- Update records. Update CRA, your bank, contracts, by-laws and the minute book.
Open Corporation for $35 is a department of Gondaliya CPA. We handle the corporate filings and the CRA update together.
Costs
| Item | Amount |
|---|---|
| Corporations Canada Letter of Satisfaction, online | $200 |
| Ontario Articles of Continuance | $330 |
| Ontario NUANS report, named corporation | $25 |
Please contact us for our professional fee, which depends on the state of the corporation’s records.
Before you start
- File any overdue federal annual returns.
- Make sure payroll, GST/HST and withholding remittances are current.
- Check that no licence, lender or contract requires a federal corporation.
- Plan the timing so the 90-day letter does not expire.
The departing resident director remains liable for 2 years for amounts that went unremitted while they served. Clean remittances protect them and you.
Tax impact
Continuance does not create a new corporation, so it is not a sale of assets. Corporate tax filing continues on the same basis. If the corporation operates in Ontario, its tax rate does not change.
Open Corporation for $35 is a department of Gondaliya CPA. Questions? Please email info@opencorporationfor35.ca.
FAQs
Will my Business Number change?
The corporation is the same legal person, so it keeps its CRA accounts. We notify CRA of the new governing jurisdiction.
Can I do this without visiting Canada?
Yes. Resolutions are signed electronically and all filings are online.
Who is Open Corporation for $35?
Open Corporation for $35 is a department of Gondaliya CPA. Gondaliya CPA is a CPA Ontario firm in Toronto, led by Sharad Gondaliya, CPA.
Get started
Please email info@opencorporationfor35.ca with your federal corporation number. Related reading: Ontario removed the resident director rule. Open Corporation for $35 is a department of Gondaliya CPA.
