Do You Need a Canadian Resident Director to Incorporate?
Most guidance online still says you do. Since 2021 that has been wrong for the majority of jurisdictions. Test your board against the rule in each one, see where a nominee is genuinely required, what it costs, and how much you save by simply choosing a different jurisdiction.
year one, all in
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The Residency Test Applied to Your Board
| Item | Basis | Result |
|---|
Every Jurisdiction, Tested Against Your Board
| Jurisdiction | Requirement | Resident Canadians Needed | Your Position |
|---|
Cost, Line by Line
| Item | Basis | Amount |
|---|
Your Jurisdiction Against Ontario
| Option | Basis | Amount |
|---|
What a Director Actually Takes On
What to Do Next
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Disclaimer: This checker applies subsection 105(3) of the Canada Business Corporations Act, which requires at least 25% of directors to be resident Canadians or at least one where there are fewer than four. Ontario repealed subsection 118(3) of the OBCA effective 5 July 2021, Alberta removed its requirement effective 29 March 2021, and British Columbia, Quebec, Nova Scotia and New Brunswick impose none. A small number of provinces, including Manitoba and Newfoundland and Labrador, retain a requirement, and Saskatchewan’s position changed recently, so please confirm before relying on any of those three. Prescribed business sectors under the CBCA, including uranium mining, book publishing and distribution and film and video distribution, carry a higher requirement. Fees for jurisdictions other than federal and Ontario are left for you to enter. This page is general information, not legal or tax advice.
Most of What You Have Read About This Is Out of Date
For years the answer was simple: at least a quarter of your directors had to be resident Canadians almost everywhere in Canada. Foreign founders either found a Canadian willing to sit on the board or paid a nominee to do it.
That changed. Ontario repealed its requirement on 5 July 2021, Alberta removed its on 29 March 2021, and British Columbia abolished its rule back in 2003. Quebec never had one. The federal statute kept its rule and a small number of provinces still have theirs, but the majority position has flipped.
A great deal of published guidance, including pages selling nominee director services, has not been updated. Before paying anyone a recurring fee to sit on your board, check whether the jurisdiction you are incorporating in actually requires it. In Ontario, British Columbia, Alberta, Quebec, Nova Scotia and New Brunswick it does not.
Where the Requirement Still Applies
| Jurisdiction | Requirement | Position |
|---|---|---|
| Federal, CBCA | 25% of directors, or at least one where there are fewer than four | Still in force, subsection 105(3) |
| Ontario | None | Repealed 5 July 2021 |
| British Columbia | None | Abolished in 2003 |
| Alberta | None | Removed 29 March 2021 |
| Quebec | None | Never imposed |
| Nova Scotia | None | No requirement |
| New Brunswick | None | No requirement |
| Manitoba and Newfoundland and Labrador | A requirement remains | Confirm before incorporating there |
How the 25% Test Works Federally
Subsection 105(3) of the CBCA requires at least 25% of directors to be resident Canadians. Where the board has fewer than four directors, at least one must be a resident Canadian. So a sole director of a federal corporation must be a resident Canadian, and a board of eight needs two.
| Directors on the Board | Resident Canadians Required |
|---|---|
| 1 | 1 |
| 2 | 1 |
| 3 | 1 |
| 4 | 1 |
| 8 | 2 |
| 12 | 3 |
Certain prescribed sectors, including uranium mining, book publishing and distribution, book retail and film and video distribution, require a majority rather than a quarter. Those are narrow but worth checking if you are in them.
What Counts as a Resident Canadian
A Canadian citizen ordinarily resident in Canada, or a permanent resident ordinarily resident in Canada. Two points follow, and both catch people.
- Citizenship alone is not enough. A Canadian citizen living in London does not qualify.
- A work permit is not permanent residence. An employee in Canada on a closed work permit does not qualify.
- Shareholders are unaffected. There has never been a residency restriction on who can own shares. This rule has only ever been about the board.
Federal or Ontario for a Foreign Founder
| Factor | Federal, CBCA | Ontario, OBCA |
|---|---|---|
| Resident director required | Yes | No |
| Name protection | Across all of Canada | Ontario only |
| Government fee | $200 | $300 |
| Extra-provincial registration | Still needed where you carry on business | Still needed outside Ontario |
| Annual filings | Annual return to Corporations Canada | Annual return to Ontario |
| Nominee cost over three years | $4,500 | Nil |
Unless you specifically need national name protection, Ontario is usually the better answer for a foreign founder. The federal brand is genuinely valuable to some businesses. For most, it costs $1,500 a year in nominee fees to solve a problem that does not exist in the province next door.
What a Nominee Director Actually Takes On
This is the part that is glossed over in most nominee offerings, and it is why a properly documented arrangement costs what it costs.
| Liability | Source |
|---|---|
| Unremitted payroll source deductions | Section 227.1 of the Income Tax Act |
| Unremitted net GST/HST | Section 323 of the Excise Tax Act |
| Up to six months of unpaid employee wages | The corporate statute |
| Environmental and occupational health orders | Various provincial statutes |
| Statutory filings and record keeping | The corporate statute |
None of that is reduced because the director is a nominee. A proper arrangement therefore needs a written agreement, an indemnity from the beneficial owners, defined limits on what the nominee will sign, and often security for the tax exposure. A nominee who is simply named on a filing with nothing in writing is a serious risk to both sides.
The Residence Trap Nobody Mentions
A corporation not incorporated in Canada is resident here if its central management and control are exercised in Canada, which is usually where the board meets and decides. That creates an awkward tension in any nominee arrangement.
A nominee who genuinely participates in decisions helps establish that management sits in Canada. A nominee who signs whatever is put in front of them is not really directing anything, which undermines both the corporate governance and any argument built on where decisions are made. It is worth deciding deliberately which of those you want rather than discovering the answer during an audit.
What It Costs
| Item | Fee |
|---|---|
| Federal incorporation, government fee | $200 |
| Ontario incorporation, government fee | $300 |
| NUANS name search | $25 |
| Our professional fee | $35 |
| Nominee agreement and indemnity, one time | $500 |
| Nominee director, per year | $1,500 |
| Registered office address, per year | $1,000 |
| Bank account opening support | $250 |
| T2 return and financial statements, per year | $400 |
| Annual return filing, per year | $50 |
The Two Things That Are Actually Mandatory
- A registered office address in the jurisdiction of incorporation, at a real address where documents can be served. A post office box is not sufficient.
- Extra-provincial registration in every province where you carry on business, which usually requires an agent for service in that province.
Those two apply whether or not you need a director. For a founder who has just discovered they do not need a nominee, that is where the budget should go instead.
What This Checker Does Not Cover
- Prescribed sectors under the CBCA, which require a majority of resident Canadian directors
- Sector rules in broadcasting, telecommunications, aviation and cultural industries, which restrict foreign control separately
- Manitoba, Newfoundland and Labrador and Saskatchewan, which need confirming individually
- The individuals with significant control register, which is a separate obligation with real penalties
- Your income tax position, including permanent establishment and treaty questions
- Immigration consequences of directorship, which are a separate matter entirely
Choose the jurisdiction first, then decide whether you need anybody on the board. Most foreign founders arrive convinced they need a nominee and leave with an Ontario corporation, a registered address and no recurring director fee at all. Full detail is on our resident director service page.
Frequently Asked Questions
Common questions from foreign founders incorporating in Canada.
Related Calculators and Guides
More tools for foreign founders setting up in Canada.
Choose the Jurisdiction First. The Director Question Often Disappears.
Tell us where you are, what you are building and where your customers will be. We will tell you honestly whether you need anybody on your board, incorporate you in the right jurisdiction, and set up the address and the bank account.