Gemma Healy-Murphy

Canada is the second largest country in the world by landmass, with six time zones, 10 provinces, three territories, and over 4.6 million Canadians (i.e. 14 per cent of the population) who claim Irish ancestry.¹ Irish-Canadians have made, and continue to make, important contributions to building Canada, and to Canadian society in general, so much so that in 2021, the Canadian federal government proclaimed March as “Irish Heritage Month” across Canada.²

This historic and cultural connection is the lynchpin of the special trade relationship between Canada and Ireland.³ The opportunities for Irish businesses in Canada are endless, most particularly in the wake of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA)⁴ which has reduced, or in some cases, eliminated barriers for virtually all sectors and aspects of Canada-Ireland trade and created additional immigration pathways for Irish citizens to work in Canada.⁵

While there are many commonalities in doing business on this side of the Atlantic, there are also stark differences. This series of articles will explore those differences, including Canada’s federal, provincial and municipal systems of government; how to establish a business in Canada; and how to resolve business disputes in Canada.

But first, here are 10 things that might surprise you about Canada:

1. Every province has its own securities regulator

Securities and take-over regulation in Canada is the responsibility of the provinces and territories. Issuers may have to deal with up to 13 different jurisdictions.⁶ Regulatory authorities coordinate their activities and develop a harmonised approach through the Canadian Securities Administrators.

2. Investments by non-Canadians may require government approval

The acquisition of “control” by a non-Canadian of a Canadian business with assets that exceed certain monetary thresholds is reviewable under the Investment Canada Act.⁷ Some transactions may be subject to approval by the federal Minister of Industry; all investments are subject to scrutiny under a broad national security provision and, in the case of a cultural business, the federal Minister of Canadian Heritage.⁸ Other Canadian statutes limit foreign ownership in specified industries. For example, the federal government recently enacted legislation that prevents non-Canadians and corporations controlled by non-Canadians from purchasing residential property in Canada for two years.⁹ This is in addition to legislation passed in certain provinces imposing additional property transfer taxes on non-Canadians when purchasing residential property.

3. Canadian directors required

Canadian corporations may be incorporated under the federal Canada Business Corporations Act or one of the similar provincial or territorial business corporations acts. Depending on the jurisdiction of incorporation, there may be a requirement that 25 per cent of the directorship be resident in Canada.¹⁰

4. Employment is not “at will”

All Canadian jurisdictions have minimum standards for the basic terms and conditions of employment including standards for conditions, wages, hours of work, overtime pay, statutory holidays, vacation, maternity and parental leave, and individual and mass termination or lay-off. “Contracting out” of these minimum standards is prohibited.

5. Anti-spam legislation

Canada’s Anti-Spam Law (CASL) requires recipients to affirmatively ‘opt-in’ to receive promotional emails and other regulated commercial electronic communications.¹¹

6. Dividend and interest payments may attract withholding tax

Dividend payments made by a Canadian company to a foreign investor are generally subject to a 25 per cent withholding tax, however, under most of Canada’s tax treaties, this withholding tax rate is reduced to no more than 15 per cent, and five per cent in certain cases if certain ownership thresholds are satisfied.¹²

7. A single antitrust regulator with broad powers

Canada’s single antitrust statute — the federal Competition Act — regulates all aspects of competition and antitrust in Canada. Antitrust law is federally regulated, therefore the provinces have no oversight role in this area.¹³ The Competition Act provides private parties with a right to sue to recover actual damages suffered as a result a violation of the Act’s criminal provisions (e.g. wage fixing/no-poaching agreement offences).¹⁴ However, as a practical matter, private parties tend to rely on convictions that result from government enforcement, which means that a private party’s action is limited to proving their damages.

8. Québec has French language requirements

The Charter of the French Language (Québec) provides that French is the official language of the province of Québec.¹⁵ Any company that maintains an address in Québec is deemed to be carrying on business in Québec and, therefore, is subject to the Charter and its various requirements regarding the use of French.

9. Tax on dispositions

Foreign investors are generally not subject to Canadian tax on capital gains realised on the sale or other disposition of shares of a Canadian company unless the shares derive the majority of their value from real property (including resource properties) situated in Canada.¹⁶

10. Litigation practice and procedure

Although both common law jurisdictions (save for Québec), litigation practice and procedure in Canada is quite different from Ireland. In Ontario, for example, every party to an action is entitled to pre-trial oral examinations for discovery in both commercial and civil matters;¹⁷ mediation is mandatory in certain venues, including Toronto;¹⁸ and pre-trial conferences are mandatory for all actions.¹⁹

• Gemma Healy-Murphy is an Irish lawyer living and practising in Toronto, Canada. She is an associate in the litigation and dispute resolution team at McMillan LLP.

Footnotes

¹ Irish is the fourth-largest ethnic group in Canada. See Government of Canada’s “Canada-Ireland Relations”.

² See Government of Canada’s “Canada-Ireland Relations”.

³ Canada is Ireland’s 7th biggest trade partner outside the European Union. See Government of Ireland’s “The EU Canada Comprehensive Economic Trade Agreement What it Means for Irish Exporters”.

⁴ See Text of the Comprehensive Economic and Trade Agreement. Not yet ratified, but in provisional application since September 21, 2017.

⁵ See Government of Canada’s “CETA Explained”.

⁶ This includes the British Columbia Securities Commission; the Alberta Securities Commission; the Financial and Consumer Affairs Authority of Saskatchewan, Securities Division; the Manitoba Securities Commission; the Ontario Securities Commission; the Autorité des marchés financiers du Québec; the Nova Scotia Securities Commission; the Office of the Superintendent of Securities for Prince Edward Island; the Financial and Consumer Services Commission of New Brunswick; Service NL Securities Regulation; the Office of the Superintendent of Securities for Nunavut; the Office of the Superintendent of Securities for the Northwest Territories; and the Office of the Yukon Superintendent of Securities.

⁷ Investment Canada Act, RSC 1985, c 28 at s. 14(1).

⁸ See Government of Canada’s Cultural Sector Investment Review.

⁹ Prohibition on the Purchase of Residential Property by Non-Canadians Act, SC 2022, c. 10, s. 235.

¹⁰ Ontario and Alberta recently removed their 25 per cent residency requirement. Currently, corporations incorporated in Manitoba, Newfoundland and Labrador, Saskatchewan, and under the federal CBCA will be subject to Canadian residency requirements for the board of directors.

¹¹ See Government of Canada’s “Canada’s anti-spam legislation”.

¹² See Canada Revenue Agency, “Applicable rate of part XIII tax on amounts paid or credited to persons in countries with which Canada has a tax convention” (January 17, 2022) online.

¹³ Competition Act, RSC 1985, c 34 at s. 36(1).

¹⁴ Competition Act, RSC 1985, c 34 at s. 36(1).

¹⁵ Charter of the French Language, CQLR c, C 11 at s. 1.

¹⁶ See Canada Revenue Agency, “Disposing of or acquiring certain Canadian property” (July 20, 2021) online. See also RBC Wealth Management’s publication on Canadian non-resident withholding tax.

¹⁷ Rules of Civil Procedure, R.R.O. 1990, Reg. 194 at Rule 31.

¹⁸ Ibid at Rule 24.1.

¹⁹ Ibid at Rule 50.