Incorporation & Director Resident or Non resident Requirements and Considerations

Corporations Business Tax


Incorporating a business in Canada is a significant step for entrepreneurs and investors looking to establish a legal entity. It offers various advantages, including limited liability, tax benefits, and increased access to business opportunities. However, there are specific requirements and considerations that individuals must keep in mind when incorporating in Canada. In this article, we will explore who can incorporate in Canada, the residence status of directors, share ownership percentages for non-residents, and the approvals needed for selling an incorporation. Additionally, we’ll introduce you to Tax4Less, a service that can help you open a federal incorporation at a competitive price, including all government fees. Who Can Incorporate in Canada? Incorporation in Canada is generally open to a broad range of individuals, including Canadian residents, non-residents, and foreign entities. Here’s a breakdown of who can incorporate:
  1. Canadian Residents: Canadian citizens, permanent residents, and individuals residing in Canada can easily incorporate businesses. Canadian residents often form corporations to take advantage of various tax benefits and limited liability protection.
  2. Non-Residents: Non-residents, including foreign nationals and entities, can also incorporate businesses in Canada. However, there are specific requirements and considerations for non-residents, particularly regarding directorship and share ownership.

Residence Status of Directors

The residence status of directors is a crucial factor when incorporating in Canada:
  1. Canadian Directors: At least 25% of the corporation’s directors must be Canadian residents. This requirement ensures a connection to the Canadian economy and regulatory environment.
  2. Non-Resident Directors: Non-residents can serve as directors, but they cannot constitute the majority of the board. Having a Canadian director helps meet the 25% requirement.

Share Ownership Percentages for Non-Residents

While non-residents can own shares in a Canadian corporation, specific rules apply:

  1. Canadian-Controlled Private Corporations (CCPCs): To qualify as a CCPC, at least 50% of the shares must be owned by Canadian residents. CCPCs enjoy various tax benefits, including the small business deduction (SBD).
  2. Public Corporations: Publicly traded corporations are subject to fewer restrictions on share ownership, making them more accessible to non-residents and foreign investors.

Approvals for Selling an Incorporation

Selling a Canadian incorporation typically involves several steps and approvals, including:
  1. Shareholder Approval: Shareholders must approve the sale of the corporation by voting on the transaction. This process may differ based on the corporation’s bylaws and structure.
  2. Regulatory Approvals: Depending on the industry and the nature of the sale, regulatory approvals may be required from federal and provincial authorities.
  3. Tax Considerations: Sellers should consider the tax implications of the sale, including capital gains tax, and may need to consult with tax professionals for guidance.

Tax4Less: Your Partner in Incorporation

Whether you’re a Canadian resident or a non-resident looking to incorporate in Canada, Tax4Less offers an efficient and cost-effective solution. Their federal incorporation services start at just $375 plus HST, which includes all government fees. Tax4Less can assist you in navigating the incorporation process, ensuring compliance with regulatory requirements and offering valuable guidance. To learn more about Tax4Less and explore their incorporation services, visit


Incorporating in Canada is a viable option for both Canadian residents and non-residents, with specific rules and considerations for each group. Understanding the residence status of directors, share ownership percentages, and the approvals required for selling an incorporation is crucial for a smooth incorporation process. Services like Tax4Less can simplify the incorporation process, making it accessible and cost-effective for individuals and entities looking to establish a legal presence in Canada.

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Corporations Business Tax

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