DOING BUSINESS IN CANADA
Canada remains a land of hospitality and multiculturalism where everyone can find a place in the sun. The second largest country in the world is blessed with a bilingual population and a warm-hearted people. During our Breakfast Talk, Frederic Letendre, attorney and partner at Yulex, Canada, told us more about how to conduct business in the country.
As part of the Interlegal Network of lawyers, YULEX is a Montreal law firm offering entrepreneurs and their businesses legal services in business law, intellectual property and technology law. They are bilingual (French and English) lawyers with an Anglo-Saxon mindset!
In answer to Customers’ demand for a different approach to legal services, YULEX innovated their value propositions:
- A frame of collaboration with clients inspired from Project Management Theory;
- A more detailed breakdown of commercial offers;
- A modern work environment, in contrast with the precious wooden furniture traditionally found in Law Firms;
- A Web Platform allowing clients to store and download all their legal documents;
- Techno breakfasts, webinars…
Canada is the second largest country in the world, but counts only 2 inhabitants per square Km. Firms involved in distribution or logistics must take this fact into account due to the long travel distances to cover the national market. It is, though, an interesting hub, due to its location between the Atlantic and Pacific oceans and the USA.
The country is officially bilingual (English & French) but the language skills of the population vary depending on the province. Outside of Quebec (the main French-speaking province), most people only speak English but there are other parts where people only speak French ! Therefore, bilingual packaging is mandatory in order to cover the national market. In Quebec, there’s even a law protecting the use of French language.
Canada is a federal state. Consequently, there are legal matters that fall under federal Law and others, provincial Law.
Amongst those that are under federal jurisdiction, you’ll find intellectual property and criminal laws, for instance.
In matters that concern the provincial level, you’ll find business matters and land ownership (although you are also able to create a company on federal level).
To simplify things, some matters are under the federal jurisdiction AND the provincial jurisdiction, such as immigration law, some parts of the incorporation of businesses, etc.
CREATING YOUR COMPANY
It is easy to create a company in Canada. A variety of options are available but the main two corporate structures are corporations and partnerships. Both are simple to incorporate or dissolve paying low legal fees.
An important point: companies created under theQuebec Law are not subject to the mandatory presence of a Canadian resident on the board of directors, unlike companies incorporated under federal jurisdiction!
Legal liability of directors & shareholders is limited in Canada. There is a corporate veil between shareholders and the corporation, which limits their legal liability. Exceptions are unpaid taxes, salaries or social charges, environmental responsibility, anti-spam laws and menace to public order. In the end, there is no liability regarding the commercial activities of the company.
There are, however, some downsides to Canada’s liberal business tradition. Since shareholders have limited liability, it is generally required to write a shareholders’ agreement when raising funds. This agreement might include a number of clauses ranging from shares transfer terms to arbitration clauses, events of death and requirements for life insurance.
However, there is a trend towards the disappearance of non-compete clauses, as in the Silicon Valley. The reason comes from the fact that the definition of “territory” in such clauses is becoming more challenging in today’s internet-dominated economy.
In a nutshell, there is complete freedom to define the shareholders’ agreement clauses, within the limits of the law. In the event of a dispute between the shareholders, if the shareholders defer their case to the court, all the information contained in their shareholder’s agreement is publicly available. Nevertheless, information will be kept private if shareholders opt for an arbitration.
THE CANADIAN ECOSYSTEM
In Canada, you will get little support from public authorities in your business. You must therefore plan for everything and work in a “close-knit guard” mindset.
Evaluation of clients, suppliers or competitors is made more difficult by the fact that there is no legal obligation to publish corporate accounts. One can only obtain this information through an investigation, for which the assessed company has to give its authorization. It is therefore not a usual procedure. In exchange, companies often ask for legal reassurances.
Lawyers in Canada often take the role of the business partner, in contrast with France, where regular meetings with your lawyer doesn’t happen often.
Montreal is a great start-Up ecosystem. The are several hubs in the city Montreal and the greater Montreal region
Want to contact YULEX? Tell us about your project through the Smart Connector and we’ll take care of the introductions!