Can a non-resident be a director of an Ontario company?
Written by For Founders Law, a Toronto firm licensed by the Law Society of Ontario. About us
Short answer
Yes. Ontario removed its director residency requirement in 2021, so an Ontario corporation's board can be made up entirely of people who live outside Canada. A federal corporation is different: at least 25% of its directors must be resident Canadians, or at least one if it has fewer than four directors. Either way, the corporation still needs a registered office address in its home jurisdiction.
What does Ontario require of directors?
Ontario no longer has a residency rule. Until July 5, 2021, at least 25% of an Ontario corporation’s directors had to be resident Canadians; that requirement, in section 118(3), was repealed from Ontario’s Business Corporations Act. A director still has to be an individual, at least 18 years old, not bankrupt and legally capable.
What about a federal corporation?
Section 105 of the CBCA still requires at least 25% of directors to be resident Canadians. If the board has fewer than four directors, at least one must be. “Resident Canadian” generally means a Canadian citizen or permanent resident who ordinarily lives in Canada, with some exceptions.
| Ontario (OBCA) | Federal (CBCA) | |
|---|---|---|
| Resident Canadian directors | Not required | At least 25%, or one if fewer than four directors |
| Registered office | In Ontario | In the province named in the articles |
| Minimum directors (private company) | One | One |
If any founder who should sit on the board lives outside Canada, this difference often decides federal vs Ontario incorporation on its own.
What else do non-resident founders need?
The corporate rules are only part of it. In practice:
- A registered office. Section 14 of the OBCA requires an Ontario corporation’s registered office to be in Ontario. A virtual office or a lawyer’s or accountant’s office can work if it reliably receives documents. See what address can I use as my registered office?
- Banking. Canadian banks run their own identity checks and may want a director or signing officer to attend in person or provide extra documents.
- Tax residency. A corporation incorporated in Canada is generally treated as resident in Canada for tax. If the people managing it live elsewhere, another country may also claim it as resident under its own rules. Get cross-border tax advice before deciding where the board will meet and decide.
- CCPC status. A corporation controlled by non-residents isn’t a Canadian-controlled private corporation under section 125(7) of the Income Tax Act. Control can come from share ownership and, in some cases, from who controls the board, so a mostly non-resident board can matter.
- Director liabilities. Non-resident directors carry the same duties and the same statutory liabilities as Canadian ones, including for certain unpaid wages and tax remittances. See are directors personally liable for company debts?
Can a non-resident also be the only shareholder?
Yes. Neither statute restricts who can own shares of a private corporation. The tax consequences of foreign ownership are the bigger question, so involve an accountant early.
Should a US company just register in Ontario instead?
Sometimes. A US corporation can get an Ontario extra-provincial licence to carry on business here. Many founders instead set up a Canadian subsidiary, for liability, hiring, tax and government program reasons. See extra-provincial registration and should your Canadian startup flip to Delaware?
Our incorporation fee starts at $600, and we can work alongside your cross-border tax advisor. See fees.
This guide is general information about Ontario and Canadian law, not legal advice for your situation. To talk through a board with directors outside Canada, book a free 15-minute consult.