Industry Committee on Nov. 4th, 2009

[Chris Warkentin, Conservative, Peace River, AB]

Thank you, Mr. Chair.

I appreciate your testimony this afternoon.

Many of my questions have been asked and answered, and we appreciate the answers you've given.

Here are a couple of thing that relate to a business's decision to incorporate. If a company, a corporation, even a mom-and-pop organization, decides it's going to set up in a cross-border location between two different provinces, is it in their best interest to federally incorporate, or would they otherwise incorporate in two separate provinces?

[Cheryl Ringor]

If they want to protect their corporate name, it would be in their interest to federally incorporate, because once a name is given to a federal corporation, they could use that name throughout Canada; whereas if you're provincially incorporated and you want to go into another province, you would have to register that name, but if that name were already taken in that province, you'd have to change your name.

[Chris Warkentin, Conservative, Peace River, AB]

Is that the only thing that is protected, by incorporating in a jurisdiction: the name? Would a company be able to incorporate, let's say, in Alberta and operate both there and in British Columbia, with locations, some offices—

[Coleen Kirby]

Usually within Canada, if you incorporate in one province and want to operate in another, you go to the other province's government and register to conduct business in that province. Once you're registered, and as long as you meet the requirements of registration, then you can conduct business in both provinces.

[Chris Warkentin, Conservative, Peace River, AB]

That's helpful.

In terms of a person applying for incorporation documents, I appreciate the fact that we talked about the speed by which a company can actually become incorporated. My experience has always been that I go to the lawyer if I'm going to incorporate. Do you have stats in terms of how many people will incorporate themselves or apply for incorporation themselves, versus those who go to a lawyer or law office to do that?

[Cheryl Ringor]

We don't have accurate stats, but based on our experience, it's about 50-50. Some jurisdictions require that you have to incorporate through a lawyer or through an agent, but because we offer it online, they could do it themselves.

[Chris Warkentin, Conservative, Peace River, AB]

In terms of communications that you have with the general business community, what types of information distributions do you use? Is it mostly online, or are there other mechanisms?

[Cheryl Ringor]

Primarily online. We also distribute our guides and other support materials through entrepreneurship centres or Canada business centres. Also, we attend trade shows or shows where entrepreneurs would attend.

[Chris Warkentin, Conservative, Peace River, AB]

I suspect that the advent of the Internet has changed the way that business is conducted in your department quite a bit. As new technologies are developed, are there any changes that you expect you will have to undertake in accommodating the business relationship with Canadian businesses?

[Cheryl Ringor]

What we're doing now is using email to remind businesses of when they have to file their annual returns. There are jurisdictions, such as New Zealand, that are taking technology a bit further and we could gain some experience from them. For instance, they send SMS messages to cellphones because a lot of small businesses usually are more mobile and sending it to a mobile unit would be helpful. Those are ideas that we're exploring and considering.

[Chris Warkentin, Conservative, Peace River, AB]

I appreciate that, and I think it's helpful, and I think that small-business owners, as you know, are so concentrated in doing whatever they do as a small business that oftentimes it's helpful. I appreciate those answers and I appreciate your contribution.

I don't know if there's anybody else on my side here who has additional questions, but I think that answers the few that were left on my page.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Warkentin.

Mr. Marston.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

This gets more interesting as we go, because my friend from the Bloc raised a point that has been on the tongues of everybody I've met in the Hamilton area. We raised concerns about the bonusing done by the CPPIB. CPPIB, I would believe, is on separate legislation; it's not part of this act.

[Colette Downie]

CPPIB is different, that's right.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

CPPIB, the Canada Pension Plan Investment Board, would have their own legislation over there, so there's no way we can get at them here. The reality is, some of our friends back home would like to get at somebody who got a $2.3 million bonus in a year they lost $24 billion. They don't quite understand that.

There's another one, in my own community, and it may be something this committee wants to look at; I'm not sure. We had in CCAA Stelco, which was purchased then by U.S. Steel, and Mr. Mott took $57 million from this company and went back south with the money in his pocket. There's a reaction to that. Obviously, from the comments I've heard here, to have a strategy to deal with this, both at the national level and the provincial level, would require some kind of a summit or gathering of those people with those particular areas of responsibility.

When you talked about incorporation and when they use a lawyer and when they don't, I recall incorporating provincially about ten years ago, and we were given the choice of getting just a quick number, but if we wanted to incorporate a specific name they felt that it required the use of a lawyer. I never did quite understand why it cost us $2,400 to find out why, but is that a provision of the way you'd get an incorporation federally? Is there a difference?

[Coleen Kirby]

You can incorporate federally with a number, which is fast, or you can get a “name” name. We've never come out with a good explanation for that one. The requirement, if you're going to use a “name” name, is that you have it approved to make sure it's not confusing yours with anybody else's name. You're required to do a NUANS search and submit certain information to us. Any member of the public has access to the NUANS site and can go online and do a search. There's a $20 charge; they can get the search themselves. You can submit the information, such as the NUANS search and information about the company, to us in advance of sending the incorporation documents and ask us for pre-approval of a name. If we pre-approve the name and give you back the letter, it has the number, and when you come back online again, you put the number in there, and again you can go through it quite quickly. Or you can also ask for a name to be approved when you submit the actual incorporation documents.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

I think you're telling me I could have saved $2,380, if I had known that.

[Coleen Kirby]

It's possible. We try to make the information available: what we are looking at; what kind of search you need. We give you access to the tools; you can do it yourself. Will you get a name that's approved or not? The question then is whether the advice of an external source, whether a law firm, search house, or anybody else, is worth their fee, in that if you submit a name that's not accepted, it becomes rejected, and you get to go through the whole process again.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Going a bit further now, in a different area, we hear from the government side, from the Prime Minister and the finance minister, how solid our banks are. Under the CBCA, do you feel that Canadian corporations, relative to the rest of the world, are as protected as they need to be? Understanding that this is a review, do you have any comment on that?

One last thing is shareholders' responsibility, in the conversation about our all knowing the due diligence that's required of the board. Is there information provided to shareholders from the government that reminds them of their responsibility to ensure that their board functions honestly and ethically?

[Colette Downie]

Let me perhaps offer a point of clarification on the initial part of your question, in terms of the types of protections you'd be thinking about. Under the—

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

I think Enron was mentioned. It's whether we have the structures in place to ensure that the reputations of Canadian companies are protected worldwide at the same level as our banking reputations appear to be.

[Colette Downie]

Do you want to...?

[Wayne Lennon]

All I can say, and this is anecdotal, is that when Enron broke in the United States, I attended any number of conferences on whether it could happen here. There were academics and business people and securities administrators and a number of different stakeholders, and the consensus seemed to be that because of the corporate law and because of the way our security laws work—and because of our market generally—it was much less likely to happen. Their banking laws are different, and there's a whole range of different parameters under which businesses have to function.

It's not to say it's impossible, but it's much less likely here.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

So there's nothing this committee should have any concerns to look for?

[Wayne Lennon]

The committee is free to examine any areas it thinks might help the Canadian marketplace and corporate Canada. But my understanding is that corporations are still subject to market forces: some will asphyxiate, some will fail, but as a group they're a pretty solid bunch.