Canadian Residency Requirements for Directors: What it Means to be “Ordinarily Resident”

For corporations incorporated federally or in Ontario, at least 25 percent of the directors must be resident Canadians. Where a corporation has fewer than four directors, then at least one director must be a resident Canadian.

The Canada Business Corporations Act (the “CBCA”) and Ontario Business Corporations Act (the “OBCA”) define a “resident Canadian” as:

• an individual who is a Canadian citizen ordinarily resident in Canada,
• a Canadian citizen not ordinarily resident in Canada who is a member of a prescribed class of persons; or
• a permanent resident within the meaning of subsection 2(1) of the Immigration and Refugee Protection Act (a person who has acquired permanent resident status and has not subsequently lost that status) who is ordinarily resident in Canada (but in the case of the CBCA, this does not include a permanent resident who has been ordinarily resident in Canada for more than one year after the time at which he or she first became eligible to apply for Canadian citizenship)

Unfortunately, the term “ordinarily resident” is not defined in the CBCA or OBCA. As a result, we must look at how courts have interpreted this term in order to understand what it means.

Generally, courts have interpreted ordinary residence to mean the place where a person resides in the regular course of their life. This can be for a short or long period of time. However, a person must be able to show that they adopted their residence voluntarily, for a settled purpose, and that they live there at least somewhat continuously. So, a person could be ordinarily resident in more than one country at the same time.

Ultimately, whether a person is ordinarily resident in a particular place depends on the specific facts in each case. Criteria the court will typically look at to determine residence include the following (please note that this list is not exhaustive):

• Past and present habits of a person’s life;
• Regularity and length of visits in the jurisdiction where a person is claiming to be ordinarily resident; and
• Ties with a jurisdiction, which can include the following:
  • Citizenship and passport;
  • Ownership or long-term lease of a home;
  • Residence of spouse, children and other dependent family members;
  • Bank accounts and credit cards;
  • Driver’s license;
  • Registration of an automobile;
  • Employment;
  • Business relationships; and
  • Links to religious organizations, recreational and social clubs, unions and professional organizations.

If you have any questions and would like to speak with a member of our team, please contact us and we would be happy to discuss these matters with you.