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              FREEEVALUATION
              Monday, 29 August 2016 / Published in Immigration, Immigration Manuals

              Guidelines Pertaining to Processing Entrepreneurs


              Last Updated on February 25, 2017

              The Guidelines Pertaining to Processing Entrepreneurs

              Operational pressures have limited the opportunity for providing counselling services.

              Pre-Application Counselling

              The authorities permit officers to provide information to prospective entrepreneurs prior to receiving the applications. As such, the officers are authorised to:

              • Discuss the possibility of an exploratory visit to Canada with the applicant and,
              • Ensure that the applicant has all the documentation required

              However, the officers would only do this as and when exigencies permit.

              Encouraging Exploratory Visits

              The Immigration and Refugee Protection Act (IRPA) encourages investors and entrepreneurs to make exploratory visits to Canada. It even provides assessment points to these individuals for doing so. As and when time permits, the authorities enable officers to:

              • Encourage prospective entrepreneurs to make exploratory visits to Canada before applying for permanent residence
                • Such visits give the applicants the opportunity to acquire first-hand knowledge about living and doing business in Canada
              • Inform the applicants that the provinces and territories strongly encourage the practice of making exploratory visits to Canada
                • Some provinces and territories provide services to potential entrepreneurs at this time. These services typically comprise:
                  • Information seminars or,
                  • Individual consultations AND,
              • Encourage applicants to contact provincial officials well in advance of any exploratory visits for obtaining the necessary information on services available

              Note:

              • It is worth mentioning that the officers would need to consider the bona fides of the applicant when they exhort the individual to undertake an exploratory visit to Canada

              Ensuring that the Applicant Has All the Necessary Documentation for Making the Application

              Officers would need to ensure that they provide the usual counselling material to the applicant. In addition, they would need to give the applicants an information package. This package typically provides clear information on the supporting documentation the applicants would need to bring for the authorities to assess the applicants’ ability to meet the definition of an entrepreneur.

              Note:

              • The authorities have attached Schedule 6 to the IMM 0008EGEN
              • This document typically provides an overview of an applicant’s financial health

              Assessing Eligibility – The Selection Criteria

              To obtain approvals from the authorities as entrepreneurs, the applicants would need to:

              • Meet the regulatory definition of an entrepreneur and,
              • Comply with the prescribed selection criteria for the entrepreneur class

              The following sections outline the elements that officers would need to consider for determining whether an applicant meets the regulatory definition of an entrepreneur or not.

              Situations could arise where the officers find that the applicant does not meet the regulatory definition of entrepreneur. In this scenario, the officers have the ability to refuse the application. If the officers find clear indications that the applicant does not meet the definition, they would not need to perform any further analysis. This is in accordance with the provisions specified in R97 (2).

              Does the Applicant Meet the Regulatory Definition of an Entrepreneur?

              Officers would need to determine whether the applicant meets the regulatory definition of an entrepreneur or not. The definition of an entrepreneur typically comprises three distinct criteria. Unless a province selects an applicant as an entrepreneur, the individual would need to:

              • Have sufficient business experience
              • Have a legally obtained net worth of at least $300,000 and,
              • Provide a written statement to the officers that the applicant intends and will be able to meet the conditions specified in subsections R98 (1) to R98 (5)

              What is Business Experience?

              The Regulations specify three express criteria that the applicant needs to meet for an officer to feel satisfied that the applicant has satisfactory business experience. These three criteria comprise:

              • Qualifying business
              • Time and,
              • Role

              What Role Must the Entrepreneur Have Played?

              Ideally, the authorities require the entrepreneur’s role in the business to concern the management and control of a percentage of the equity of the qualifying business. To understand this, consider the following table:

              Attribute

              Percentage of Equity

               

              100 percent

              50 percent

              33.33 percent

              Employment

              2

              4

              6

              Total Annual Sales ($)

              500,000

              1,000,000

              1,500,000

              Annual Net Income ($)

              50,000

              100,000

              150,000

              Net Assets at Year End

              125,000

              250,000

              375,000

              How to Calculate the Percentage of Equity for Entrepreneur Applicants?

              Situations could arise where officers might need to look beyond the legal or de jure control of shares in the qualifying business. This would enable them to determine the percentage of equity controlled by an entrepreneur applicant and the applicant’s spouse (where applicable).

              In some cases, the legal control of a portion of the qualifying business’s equity could rest with another individual. However, officers might still consider this to be part of the applicant’s percentage of equity. For instance, in certain jurisdictions, the law precludes non-citizens from legally controlling a majority interest in a business. In situations like these, the officers would need to check whether other documents exist that better reflect the effective or de facto control of the business. Examples of such documents would typically include trust or licensing agreements.

              In many of the Gulf States, non-citizen applicants legally own 49 percent of the capital stock of a corporation. They also have agreements that stipulate full control over the assets, obligations and profits of the corporation in return for a small licensing fee to the Gulf national or 51 percent shareholder. In such a scenario, the officers would consider the equity percentage for the qualifying business calculation to be 100 percent.

              In some situations, officers might come across serious concerns that the applicants produced such documents or agreements solely for the purpose of satisfying immigration requirements. In this scenario, the officers would need to satisfy themselves that the applicant has not engaged in an artificial transaction. This is in accordance with the provisions specified in R89. However, the officers would also need to consider these agreements within the local context. This is especially so because the legal environment in certain countries could make these agreements a necessity when it comes to non-citizens operating a business.

              Related Guidelines’ Topics:

              • Guidelines for Controlling a Percentage of the Equity of a Qualifying Canadian Business Equal to or Greater Than 33.3 Percent
              • Guidelines for Applying the Selection Criteria for Entrepreneurs
              • Guidelines Pertaining to Concerns about the Documentation and Provenance of Funds
              • Guidelines for Officers When the Veracity of the Documentation is in Doubt
              • Guidelines for Reviewing Other Documentation
              • Guidelines for Allowing Early Entry – Issuing a Temporary Resident Permit

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