Canada is one of the largest economies in the world, which attracts many international players in the financial industry. Also, Canada relies on a very good financial sector which is supervised by the Office of the Superintendent of Financial Institutions.
Foreign investors who want to open a financial company in Canada are allowed to do that, as long as they comply with the local legislation and obtain the necessary licenses depending on the type of financial institution they want to set up. Below, our Canada company formation agents explain the procedure on how to open a financial company.
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Types of financial companies in Canada
There are two main types of financial institutions which can be opened in Canada:
- companies which can receive money deposits;
- insurance companies.
Financial companies receiving deposits are further divided into:
- banks;
- trust companies;
- loan companies;
- cooperatives.
Foreign banks can also set up branch offices in Canada. Insurance companies are categorized into life and non-life insurance companies.
Registering a financial company in Canada
The company registration process of a Canadian financial company is the same as for any other type of business in this country. Our company registration consultants in Canada can assist with this procedure. Once the company is registered, it must comply with the requirements of the Office of the Superintendent of Financial Institutions which will issue the charter of the financial institution.
Licensing requirements for Canadian financial companies
During the process ofcompany formation in Canada, many businesses must apply for adequate licenses, which attest that the respective entities have the right to develop a business activity in the respective sector.
This rule applies to investors who want toopen a company in Canada as a financial business, but it must be noted that the licensing obligations can vary, in accordance with the specific object of activity the business will carry out.
Licensing requirements may also vary from one province to another – in some Canadian provinces, financial companies are exempt from provincial licensing, but they may need to have a federal license. It must also be noted that some individuals working in the financial industry need to obtain appropriate licenses in order to develop their work activity.
Concerning the process of company incorporation in Canada that refers to the licensing obligations, we mention the following:
- for provincial incorporation, trusts and loan companies will need a license or to be registered with the local financial authorities (requirements depend on the province);
- mortgage lenders must be licensed, but exemptions for this type of activity exists in certain provinces, such as Ontario;
- insurers can also be exempt from provincial licensing, provided that they are incorporated at a provincial level;
- most of the Canadian domestic insurers are, however, incorporated at a federal level, in which case, a license is required;
- banks need to be approved for their activity by the Office of the Superintendent of Financial Institutions (OSFI), which is granted after OSFI issues an order of authorization.
Special requirements for financial companies in Canada
Banking institutions and insurance companies registered in Canada must also comply with the following requirements:
- banks must become members of the Canada Deposit and Insurance Corporation;
- trust and loan companies must become members of the Canadian Payments Association;
- insurance companies must apply for an insurance company license and must meet certain capital requirements;
- all types of financial companies must obtain specific approvals depending on the province where they will operate.
How many financial entities operate in Canada?
Foreign investors who want to set up a company in Canadamay be interested in the number of financial entities operating here, both as domestic and foreign entities. In the list below, our consultants present the current data issued by OSFI:
- 341 regulated financial institutions;
- 16 foreign banks representative offices;
- 80 banks;
- 41 trust companies;
- 12 loan companies;
- 54 life insurance companies.
It must be noted that one can register a business in Canada as other types of financial entities, such as the fraternal benefit societies. Regardless of the type of financial company investors want to set up, these companies will need the specialized services of accountants and this is why we recommend you our CPA in Canada.
For full information or assistance in opening a financial company in Canada, do not hesitate to address our local company formation representatives. We also invite to youcontact us if you are interested in business immigration programs, such as the Owner Operator program in Canada or the intra company transfer in Canada.