February 25, 2014

Needless duplication of registration requirements hinders business expansion across Canada, says C.D. Howe Institute

TORONTO--Canadian businesses face costly red tape when they want to do business across provincial borders; a problem that is hindering business expansion and economic growth, according to a report released today by the C.D. Howe Institute. In "Registering in Harmony: The Case for Pan-Canadian Corporate Registration," authors Daniel Schwanen and Omar Chatur note that while harmonization of corporate registries is proceeding apace around the world, in Canada, incorporated companies are required in most cases to register separately in every province where they want to conduct business.

"Everyone from the premiers and business groups to the federal government in its latest budget have called for an end to this costly duplication," commented Schwanen, "so far to little avail."

Registration across multiple provinces often means that companies operating across Canada have to provide similar information to many governments, often in different formats, note the authors. Businesses must pay fees in multiple jurisdictions when they register or renew their registration each year. In most, they must also pay to maintain an attorney or "agent for service" to represent the company within its borders.

Canadian governments agreed in 1994 that addressing extra-provincial corporate registration requirements is important to a more open market. Despite this apparent alignment of purpose, pan-Canadian harmonization of corporate registration has not yet occurred. This is in spite of follow-up entreaties such as that of the Canadian Premiers, at the August 2010 meeting of the Council of the Federation, formally directing the ministers responsible for Internal Trade to reconcile their extra-provincial corporate registration and reporting requirements. Most recently, the federal government challenged premiers to come up with steps toward harmonization in its latest budget.

From an "ease of doing business" perspective, the New Brunswick and Nova Scotia mutual recognition system is the most advanced example of cooperation between two Canadian jurisdictions, they note. Another example is the New West Partnership Trade Agreement, which includes British Columbia, Alberta and Saskatchewan. It fulfills some important objectives with respect to easing the red tape burden, but only among three provinces. Agreements between Ottawa and the provinces of Newfoundland and Labrador, Nova Scotia and Ontario and Saskatchewan allow businesses incorporating federally to save time on completing extra-provincial registration for these provinces.

While most provinces have made efforts to streamline their internal corporate registration requirements, the goal of achieving pan-Canadian harmonization has remained elusive. The authors recommend relaunching a national process aimed at achieving a pan-Canadian system in which corporations need only "register once" to do business across the country; one that brings Canada up to the best global standards in this area.

The C. D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. It is Canada's trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review. It is considered by many to be Canada's most influential think tank.



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