The following was presented by Colin R. Singer as a key note speaker at the Conference Board Canada, Immigration Summit, Ottawa, April 5, 2016.

The federal government is losing out on the world’s wealthiest investors despite Canada being an enviable destination for ultra high net worth business people.  It lost its way when the previous federal government terminated the federal immigrant investor program and replaced it with a program that has failed to attract any significant interest. Canada must now reclaim its role as a dominant operator in the residence through-investment industry as it has the policy basis and the market demand to do so.

A leading study gives conclusive evidence that immigrants are far more likely to own businesses than their Canadian counterparts, a key component for economic growth.  Released in March 2016 and entitled Immigration, Business Ownership and Employment in Canada, the study concludes that ‘rates of private business ownership and unincorporated self-employment are higher among immigrants than among the Canadian-born population’. We know this officially for the first time because data based on immigrant business ownership has only recently become available with the introduction of the Canadian Employer-Employee Dynamics Database, which you can access here.

Why wouldn’t Canada want to attract new residents and citizens who start their own businesses, create much-needed jobs and undertake substantive consumption expenditures in the local economy?

Canada’s history in the residence-through-investment industry

Until 2014, the Federal Immigration Investor program gave entry-level millionaires a pathway to residency and ultimately, citizenship in Canada. The scheme operated largely on the interest income earned from investors’ funds. The program benefits to Canada, peaked during the 1990s, when interest rates were high.

Despite a long regime of low interest rates, the very same scheme, with the proper investment threshold adjustments, would still put Canada at the forefront of investment immigration for mid-level applicants today, and bring immeasurable benefits to Canada, if it were not terminated.  When it was cancelled in 2014, more than 15,000 mainly-Chinese business immigrants had been waiting for as long as six years, each ready to invest $800,000 in a federal backed immigrant investor program.

The previous entrepreneur program, although far less popular, was also terminated primarily because federal immigration officers could not efficiently assess the viability of proposed business projects in provinces.

The new replacement program for the former immigrant investor program was launched in February 2015 and was aimed at ultra high net worth investors. Known as the Immigrant Investor Venture Capital (IIVC) Pilot Program, it confirmed Canada`s definitive retreat from the high net worth investor industry.  However the new program was doomed to fail from the start.

It aims to attract ultra high net worth individuals, (those investing $2M for temporary residence for applicant and family members) through largely uncompetitive conditions such as mandatory language testing and an investment requirement of $2 Million into an approved fund for 15 years. Programs in the USA, UK, and Australia (referred to as Tier 1 countries based on visa free travel and other indexes), among others, require considerably less onerous conditions, and this explains why less than 10 applications have been received against a target of 60 for this pilot project program.

As a consequence of this failed policy, Canada is losing out on attracting the world`s most successful business people and their families who otherwise would choose to settle here.

Conversely, the Quebec government continues to promote its highly successful Quebec Immigrant Investor Program(QIIP), which has been in place since 1986. It requires applicants to have a net worth of $1.6 million, two years of business experience in the last five, an intention to live in Quebec, an $800,000 investment over five years, after which the money is returned with no interest and a $15,000 processing fee.

The administration of the QIIP program is largely funded by the processing fees it charges investors and it was fully subscribed in 2014 and 2015 with 1,750 applicants each year.  The 2016 version of the QIIP program will open on May 30^th and will accept 1900 applications.

The benefits of the QIIP to the province are undeniable.  Through Investment Quebec, the province manages an immigrant investor fund that issues grants to Quebec businesses. During the period January 2001 through February 2016, the QIIP program generated more than $700 Million from immigrant investors and this sum was allocated to 4,737 Quebec businesses located in 17 regions throughout the province.

Canada’s Policy Needs

On the basis of the empirical evidence contained in the Immigration, Business Ownership and Employment in Canada, findings, Canada has the policy basis to justify re-designing an ultra high net worth business immigration program.  It just needs to create the right policies and well structured programs that will succeed in attracting carefully chosen ultra high net worth business people and ensure the financial benefits that can be realized.

It was recently confirmed the Liberal government plans to inject some life into the country’s struggling economy by committing substantial expenditures on a variety of projects over the next five years. The result could be a budget deficit that may exceed $120 billion during the period.

One way to offset this shortfall is to re-design policies under federal investment immigration programs that will bring significant capital to Canada and at the same time, attract some of the world`s most successful business people to settle in Canada.  This will offer such individuals with opportunity to relocate their families here, enroll their children in Canadian study programs and pursue continued successful business ventures over the longer term.

If executed strategically, Canada will realize significant gains to its human capital in the immediate term and through the children of such business people, in the long term. The human capital benefit that the children of successful business people bring to Canada is immeasurable and invaluable.

A new business program must fit within the current legislative framework

Our diverse country featuring shared jurisdiction between the federal government and the provinces and territories in immigration matters has resulted in each of the 10 provinces and three territories devising their own immigration policies and programs, known as provincial nominee programs (PNP), that are tailored to their individual requirements.  Given the individual nature of each province and territory, provincial governments are best suited to devise and manage their own individual programs.

Within PNPs, many of the provinces promote active entrepreneur options to a small number of high net worthbusiness people.  Depending on the province, programs typically operate under modest annual quotas, and require investments ranging from $150,000 to $800,000 among other criteria.

Quebec, through its QIIP, runs the only provincial passive high net worth investor program, which will remain so because of a long-standing agreement as well as prohibitions contained in section 87 of the Immigration and Refugee Protection Regulations.

There is no logic for the federal government to create a secondary entrepreneur program that has many of the hallmarks of existing provincial programs.

Consequently, there is strong policy justification for a carefully-structured and viable passive immigrant investor program, geared towards ultra high net worth investors, at the federal level.  The objective would be to resurrect the failed Immigrant Investor Venture Capital (IIVC) Pilot Program.

Current federal-level programs:

1. Immigrant Investors Venture Capital Pilot Program (IIVCP) – (Ultra High Net Worth)

Eligibility requirements:

• Personal net worth of $10 million.
• Applicants must invest at least $2 million into a government-approved VC fund for a minimum period of 15 years, with no guarantee of return.
• Applicants must demonstrate their net worth threshold was obtained from lawful, for profit-making management, businesses or investment activities.
• Mandatory language testing
• Proof of completed Canadian post-secondary education of at least one year, or proof of a foreign educational equivalent (applicants with a personal net worth of $50 million are exempt).

Against a pilot target of 60 when it was established in February 2015 and extended through the end of 2015, this program has attracted less than 10 applicants. Thus far, it fails to compete with any of the programs from “Tier 1” nations on criteria such as net worth thresholds, investment term, asset class composition and language requirement stipulations.

2. Start-Up Visa Program – (High Net Worth – Specialty Entrepreneur Program)

Eligibility requirements:

• Commitment certificate or letter of support from a designated entity
• Sufficient unencumbered, available and transferable settlement funds
• At least one year of post-secondary education
• Mandatory language testing.

This program was established in 2013 and grants permanent residence and work permits to qualified immigrant entrepreneurs. The program aims to recruit entrepreneurs and link them with private sector businesses in Canada.  The goal is to help establish businesses that have the potential to scale internationally. However, less than 100 applications have been received against an annual target of 2,750.

The international competition

Residency

Canada has significant competition in the permanent residence-through-investment field, among tier 1 countries with the USA, UK, Portugal and Australia all providing pathways to residence with a blend of active entrepreneur and passive investor options. In total, more than 20 countries offer permanent residence opportunities.

The US EB-5 requires an investment of $500,000 or $1 million, while the minimum investment for the UK program is C$4 million with no net worth threshold or language requirements. It also allows investors flexibility on the choice of asset classes.

In general, Canada’s IIVCP has failed to attract interest because it imposes conditions that are not competitive in the international market. These include unnecessary language requirements, imposing a net worth threshold, an unreasonable term of 15 years and no flexibility for the investor in the selection of an asset class.

Citizenship

While Canada must re-establish a credible standing and compete with the international market place in the permanent residence field, it could have an interesting opportunity to become a dominant Tier 1 player in the citizenship through investment arena.

Currently Austria, Malta and Cyprus are the only Tier 1 countries offering a direct path to citizenship while Antigua and Barbuda, Dominica, St. Kitts and Nevis and Saint Lucia also offer such programs.

Canada, Australia, Belgium, Portugal, Singapore, the UK and the US all offer a pathway to citizenship after long periods of permanent residence.

Canada, therefore, could become a popular citizenship-through-investment destination by becoming the premier Tier 1 nation offering such a scheme. The only credible rival would be Malta, which offers Maltese citizenship that has a very high international stature.

In pursuing this new policy initiative, Canada would be in position to attract the world’s most successful ultra high net worth businesspeople along with their families and by extension their business networks. This could prove highly lucrative to Canada under a number of objective assessments, depending on the structure of the program.

Devising new programs

If Canada is to return to the forefront of the business immigration field, and replicate the success of the QIIP, it must do so with well-devised, targeted programs with competitive requirements that attract the right calibre of applicants on the basis of clear policy objectives.

A redesigned immigrant investor program can retain the best elements from international programs and add elements that meet Canadian policy objectives.  A new citizenship through investment program would be geared to an even more select but very limited number of international clientele. It must remain competitive in the market.

While two separate schemes are being put forward, there are overriding considerations that must be met.

These include:

• Credibility
  Strict due diligence and compliance mechanisms must be put in place.
• Competitiveness
  Must exceed or at least equal similar international programs using a variety of objective international measures.
• Efficient cost to manage
  Centralized processing, mandatorybackground checks and due diligence can be outsourced and conducted by reputable third parties. Applications must not be submitted directly by applicants or consultants but through designated intermediaries, thus ensuring standards met.
• Fast processing
  Industry standard is six months, achieved by limitations on the number of applications submitted each cycle.

Having established these key requirements, the next step is to define how the separate schemes – for permanent residency and citizenship – could look.

1) New permanent residency-through-investment program

• An investment threshold of between $1.5 million and $2 million – very competitive when compared to similar programs.
• No minimum net worth, making it more attractive for an investor and easier to administer.  This is consistent with the industry.
• Asset classes to be chosen by investor.   This is consistent with the industry.
• Investment to exclude residential real estate, thus avoiding concerns of real estate bubbles in popular geographical areas.
• Strict due diligence and compliance, conducted by expert third parties.
• Processing fees of $20,000, plus additional fees for accompanying dependents. Processing fees can help offset program management costs, similar to the QIIP.

2) New citizenship-through-investment program

• An investment threshold of $10 million. This could be marketable, as Canada would become the only tier 1 country in North America in the citizenship-through investment industry.
• No minimum net worth, making it more attractive for an investor and easier to administer.  This is consistent with the industry
• Asset classes: 50 per cent of investment allocated towards a federal infrastructure fund and 50 per cent chosen by investor, with restrictions.
• One year of permanent residence status, including a minimum of three months physical presence before an application for Canadian citizenship can be submitted.
• Strict due diligence and compliance, conducted by expert third parties.
• Processing fees of $50,000, plus additional fees for accompanying dependents. Processing fees can help offset program management costs.
• Creation of an International Refugee Fund to receive 0.0005% of investment ($5,000 per investor). This would serve as a program to provide monetary assistance to those affected by a current international migrant crisis caused by international conflicts.

The next step

Canada must now assess the tangible, objective benefits of a recalibrated residence and a well-developed citizenship-through-investment program for ultra high net worth investors to attract the highest caliber of new residents and citizens.

General Information: Contact us to receive more information about this article.

Interested Investors: Kindly complete the following form and we will contact you to discuss your global residency and citizenship investment options.

Applicant Requirements for Ontario Entrepreneur Stream Immigration Program

Applicants under the OES must:

• Have at least 36 months of full time business experience in the past 60 months.
  • The experience must be as an owner or senior manager of a business.
• Have a minimum net worth of $1,500,000 if your proposed business will be in the Greater Toronto Area (GTA).
  • If your proposed business will be outside of the GTA, the minimum net worth requirement is $800,000.
  • If your proposed business will be involved in Information Communications Technology or Digital Communications anywhere in the province, the minimum net worth requirement is $800,000.
• Be ready to invest at least $1,000,000 in an Ontario business and possess at least 33% equity ownership if the business is in the GTA.
  • If the business is outside the GTA, you must be ready to invest at least $500,000 and have at least 33% equity ownership.
  • If the business will be involved in Information Communications Technology or Digital Communications anywhere in the province, you must be ready to invest at least $500,000 and have at least 33% equity ownership.
• Commit to creating two full time jobs for Canadian citizens or permanent residents in the proposed company.
• Make an Exploratory Visit to Ontario in the 12 months prior to application. Note: This only applies to those who are buying an already existing business.

• Score minimum CLB 4 in English or French.
• Actively involved in the daily management of the business
• Physically reside in Ontario for at least 75% of the time in which you are managing the business.

Business Requirements for  Ontario Entrepreneur Stream Immigration Program

Businesses under the OES must:

• Be for-profit
• Sell goods and/or services
• Earn income actively
• Comply with Canadian business laws.
• Comply with Ontario labour laws.
• Be a permanent business in Ontario.
• If there are third party investors, the investors must be a bank or an institutional investor.

If the applicant is purchasing an already existing business

• The business must have had only one owner over the past 60 months.
• The applicant must assume full control of the business.
• The business cannot have been previously owned by an immigration applicant.
• All prior jobs and wage levels must be maintained.
• Two additional full time jobs must be created.
• The applicant must intend to grow the business.

Ineligible Business

The following businesses inside the GTA are ineligible:

• Existing Franchises in Ontario (new foreign franchises expanding into Ontario are permitted).
• Gas Stations
• Tire Recycling
• Scrap Metal Recycling
• Pawnbrokers
• Bed and Breakfasts
• Holding Companies
• Laundromats
• Automated Car Washes
• Pay day loan businesses

The following businesses outside of the GTA are ineligible:

• Tire Recycling
• Scrap Metal Recycling
• Pawnbrokers
• Holding Companies
• Laundromats
• Automated Car Washes
• Pay day loan businesses

Read more about the next steps of Ontario Entrepreneur Stream Immigration Program by clicking here.

Interested employers: Kindly contact us here to receive further information.

Interested candidates: Find out whether you qualify to Canada by completing our free on-line evaluation. We will provide you with our evaluation within 1-2 business days.

The government of Ontario has authority to nominate certain applicants for Canadian permanent residence under the Provincial Nominee Program (PNP).

The OES business program is aimed at individuals from outside Canada who want to start a business or buy an already existing business in Ontario. Those who are approved for the program will be nominated for Canadian permanent residence. Once nominated, an applicant qualifies to apply for Canadian permanent residence.

The initial Expression of Interest registration can be submitted online. For more information, click here.

There are a number of steps that need to be followed in order to apply under the OES business program:

Stage 1

Step 1: Make Sure You Satisfy all Criteria and Requirements

Step 2: Complete and Submit an Online Expression of Interest (EOI)

Step 3: Invitation to Apply

Step 4: Submit Your Online Application

Step 5: Application Assessment

Step 6: Sign Performance Agreement

Stage 2

Step 7: Before You Arrive: Temporary Work Permit

Step 8: After You Arrive: 20 Months For Business Establishment

Step 9: Nomination for Permanent Residence

Step 10: Application For Permanent Residence, Plus Three Years of Monitoring

Step 1: Make Sure You Satisfy all Criteria and Requirements

Ontario suggests candidates thoroughly self-evaluate before registering an Expression of Interest (EOI).

Primarily this should include making sure you meet minimum requirements, but candidates are strongly advised to visit the province to assess business opportunities and make local contacts.

Ontario also publishes the following list of ineligible businesses:

Ineligible Businesses Inside Greater Toronto Area 

• Existing Franchises in Ontario (new foreign franchises expanding into Ontario are permitted)
• Gas Stations
• Tire Recycling *
• Scrap Metal Recycling *
• Pawnbrokers *
• Bed and Breakfasts
• Holding Companies *
• Laundromats *
• Automated Car Wash Operations *
• Pay Day Loan and related businesses *
• Businesses which have been previously owned/operated by current or former OINP business stream nominees *

* Star indicates businesses that are also ineligible outside Greater Toronto Area

Step 2: Complete and Submit an Online Expression of Interest (EOI)

An EOI is a document by which the applicant states an intention to immigrate to the province of Ontario under the OES. The EOI is filled out online.  The applicant is assessed and given a score using a points system. The EOI must be filled out accurately and honestly. Points are awarded based on:

• Business experience
• Personal Net worth
• Amount of Intended investment
• Number of jobs to be created
• Whether you completed an Exploratory Visit to Ontario
• Whether your business is in one of the following sectors:
  • Aerospace
  • Automotive
  • Financial Services
  • Food and Beverage Manufacturing
  • Information and Communications Technology
  • Life Sciences
  • Mining
  • Tourism
  • Water Technology
• The National Occupation Classification of the position your employment falls under.
• Education
• Language Abilities

Step 3: Invitation to Apply

An EOI is a document by which the applicant states an intention to immigrate to the province of Ontario under the OES. The initial EOI registration can be submitted online. For more information, click here.  The applicant is assessed and given a score using a points system. The EOI must be filled out accurately and honestly. Points are awarded based on:

• The purpose and objectives of the business.
• What the business will be selling.
• How the business will operate.
• Who the customers will be.
• How the business will achieve its objectives.
• Challenges the business may face.
• A description of how the challenges will be overcome.

Step 4: Submit Your Online Application

There is a $3,500 application processing fee. Incomplete applications will not be assessed.

Step 5: Application Assessment

Once the fee and all required documents are received, the application will be assessed. Some applicants may be required to attend a mandatory interview.

Step 6: Sign Performance Agreement

If your application is approved, you will be asked to sign a Performance Agreement. The Performance Agreement will outline the rules that must be followed in order for you to be nominated for permanent residence.

Step 7: Before You Arrive: Temporary Work Permit

Once you sign the Performance Agreement, you will be sent a Letter of Confirmation. This letter will allow you to apply for a Temporary Work Permit from the Canadian government. If you meet all the relevant criteria of the Canadian federal government, you will receive a Temporary Work Permit.

Step 8: After You Arrive: 20 Months For Business Establishment

Once you obtain a temporary work permit, you should move to Ontario and begin establishing your business as soon as possible. You must inform the immigration processing office of your arrival in Ontario within 7 days of arrival. Within 18 months of arriving in Ontario, you must submit a report showing that you are abiding by all the rules of the OES and the terms of your performance agreement.

Step 9: Nomination for Permanent Residence

If your report is approved, you will be nominated for permanent residence by the Ontario government. The holder of a nomination certificate may submit an application for Canadian permanent residence to the federal government as long as the nominee continues to abide by the performance agreement and the requirements of the OCS mentioned above.

Step 10: Application For Permanent Residence, Plus Three Years of Monitoring

If you obtain permanent residence, you will be monitored for an additional period of 36 months to make sure that you continue to abide by all the rules of the OES and the terms of your performance agreement.

Dependants

The following dependants can be included in an application of the OES business program:

• Spouse
• Common Law Partner
• Dependent children who are:
  • Younger than age 19 and do not have a spouse or common law partner OR
  • Dependant on their parents due to physical or mental illness
• Dependant children of dependant children.

Interested employers: Kindly contact us here to receive further information.

Interested candidates: Find out whether you qualify to Canada by completing our free on-line evaluation. We will provide you with our evaluation within 1-2 business days.