Navigating Business Ownership Rules for Canada’s Start-Up Visa Program
Immigrant entrepreneurs are flocking to Canada under the Start-Up Visa (SUV) program, which allows each applicant to pool resources with four others for a qualifying business, in record numbers. The latest data from Immigration, Refugees and Citizenship Canada (IRCC) reveals that the country was poised to welcome more than twice as many immigrant entrepreneurs through the SUV as 2023 came to an end compared to the previous year.
Qualifying businesses must secure a commitment from a designated organization, and each applicant must hold at least 10 per cent of the voting rights attached to all shares of the corporation outstanding at the time of application. Moreover, applicants and the designated organization must jointly hold more than 50 per cent of the total voting rights attached to all shares of the corporation outstanding at the time of application.
Permanent residence is granted to the owners of these businesses provided they provide active and ongoing management of their business from within Canada, are an essential part of the operations of the business in Canada, and the business is incorporated in Canada.
Under the program, a qualifying business must receive a commitment from a designated organization, which can be any one of the approved angel investors, venture capital funds, or business incubators. These designated organizations have their own intake and review processes to determine which proposals they will support. Sometimes, business owners have to submit a detailed business plan, while other times, they must make an in-person presentation of their business concept.
A designated angel investor group must invest at least $75,000 into the qualifying business, or candidates can qualify with two or more investments from angel investor groups totaling $75,000. Similarly, a designated venture capital fund must confirm an investment of at least $200,000 into the qualifying business, or candidates can qualify with commitments from two or more designated venture capital funds totaling $200,000. Additionally, a designated business incubator must accept the applicant into its business incubator program.
It is up to the immigrant investor to develop a viable business plan that meets the due diligence requirements of these government-approved designated entities. If an agreement is reached with a designated organization, it will send a letter of support, which needs to be included in the application to IRCC. This letter serves as proof that the venture capital fund, angel investor group, or business incubator is supporting the business idea. The organization will also send a commitment certificate directly to IRCC, which will be used to assess the application. IRCC may request more business information before making a final decision.
In conclusion, understanding and adhering to the business ownership rules are crucial for immigrant entrepreneurs seeking to leverage Canada’s Start-Up Visa Program. By carefully navigating these regulations, entrepreneurs can increase their chances of success and contribute to Canada’s vibrant entrepreneurial landscape.
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