BlogThe Absence of a Meaningful Business Immigration Program: Canada’s Lost Opportunity

15 January 2022

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Few would realize or recall that Canada was a world leader in introducing business immigration programs – which would soon be followed by most of the leading world economies – the majority of which still maintain such programs today. In 1986, Canada introduced the Investor (IIP) and Entrepreneur (EP) immigration programs. These programs changed little over the years until June of 2002 with the introduction of the Immigration and Refugee Protection Act (IRPA) which set out defined regulatory criteria for the Investor, Entrepreneur and Self-Employed categories of business immigration. Today, the only of these programs which remains is the Self-Employed category, with the IIP and EP programs having been suspended in 2012 and ultimately terminated in 2014. In 2013, the Start Up Visa (SUV) category was introduced as a pilot program which became a permanent program on April 1, 2018. Given the elimination of the IIP and EP, and with the recognized shortcomings of the SUV, Canada is lacking a meaningful business immigration program and the potential significant benefit that business immigration represents.

Canada’s business immigration programs were designed to attract business expertise and capital with a view to stimulating the economy. The Investor immigrant was required to demonstrate a specific net worth, have a minimum threshold of business ownership or senior managerial experience and make a refundable passive investment of $400,000. In later years this investment threshold was increased to $800,000. The funds were placed in a specified government investment vehicle to be utilized by the provinces or territories for projects determined by government officials and, after being utilized interest free, were returned to the applicant. Upon making the financial investment, the immigrant applicant and his family members would be granted permanent residence. Many, if not most, immigrant investors were astronaut migrants who maintained their footings abroad and did not establish themselves permanently in Canada. The Entrepreneur program required applicants to also demonstrate a specific net worth, have demonstrated business experience and establish a business in Canada as well as create at least one job opportunity for a Canadian. There was no defined minimum investment amount. Many entrepreneurs made a minimum investment, if any at all. Ultimately the immigration department felt that the effort of tracking the program was not worth the immigration reward to the applicants and the programs were terminated in 2014.

In 2013 the Start Up Visa (SUV) was introduced with a view to attracting start up companies with innovative ideas to help stimulate the economy. A prospective SUV applicant requires the financial or practical support of a government approved Designated Organization (DO) – a Venture Capital or Angel Investor fund or Business Incubator. The concept was to capitalize on the experience of Silicon Valley and attract innovative entrepreneurs. There is no requirement that the business venture succeed – it is recognized that, as a start-up venture, there is a high degree of risk and notwithstanding potential business failure, successful SUV applicants will maintain their PR status. Arguably the program has shadowed aspects of the IIP program whereby, in many cases, the applicants play a passive role and ultimately pay the DO’s a fee for their support to meet the criteria of the program. In addition, a considerable backlog of applications has developed which will likely take several years to process. In its October 2021 edition, LEXBASE reported a total inventory of 6730 pending SUV cases. The positive aspect of this reality is that there is clearly an ongoing global market demand for Canadian business immigration vehicles for which applicants are prepared to pay a considerable sum.

Arguably the shortcomings of the IIP program were not due to the immigrants themselves but rather the failure of the government entities to make meaningful use of the capital investments raised under the program. Similarly, the EP program was not sufficiently defined from an investment perspective and required too much scrutiny by immigration officers, generally not comfortable with, nor suitably trained for, assessing or evaluating business applications. However, in the aftermath of the Covid pandemic, business immigration has the potential to help kick-start Canada’s economy in a significant and meaningful way. Here are two proposals for consideration:

1) Re-introduce an Immigrant Investor Program

Eric Major, CEO of Latitude, a global residency and citizenship firm, is of the view that Canada stands to gain considerably from re-establishing a re-vamped Investor program. A Canadian citizen himself, Eric has decades of experience in the “Investment Migration” industry. Having started out in Montreal as the head of National Bank’s Immigrant Investor Program Division in 1994, Eric then moved out to Vancouver to head HSBC’s IIP business for 15 years. In 2011, he went on to head Henley & Partners in Europe, a leading citizenship-by-investment firm. After five successful years as the CEO of Henley, he then moved on to establish Latitude in 2017, which has since grown to 15 offices and over 85 staff worldwide. In Eric’s view, the concern with the previous Canadian IIP is not with the nature of a passive investment itself but rather (a) a lack of creativity and meaningful use of the raised capital and (b) a lack of genuine links by many of the previous applicants, leaving no clear ancillary benefits to the country beyond the initial investment. In addition to having the applicant make a significant passive investment or donation, as he suggests below, he proposes that an immigrant investor should be granted a temporary visa at first, and would only be able to apply for PR after maintaining, for at least 3 consecutive years, 183 days or more each year in Canada along with concurrent Canadian income tax filings for these 3 years. This would dispel the “astronaut” label linked with the previous IIP. In addition, he recommends an experienced private sector business entity or administrative board to oversee the deployment of the capital raised, so as to ensure meaningful and transparent investments for the benefit of the Canadian economy. He draws upon his experiences in other countries for examples of how to put the funds to use, whereby these countries utilize the capital invested for visible improvement projects, such as schools and hospitals and other identified community infrastructure projects.

Given Eric’s cumulative experience in the Investment Migration industry, he is of the view that there is still considerable demand for Canada and that foreign nationals would readily accept to put either (a) an “at risk” investment of $1 million or (b) a non-refundable contribution of $500,000 towards a worthy public endowment or charitable fund, as determined by the Federal government. Canada would attract, he estimates, over 2,000 applicants each year, which under the second option would translate to over $1 billion a year of non-refundable cash supporting various worthy causes, a transformative sum that would flow in each and every year the IIP remains open.

2) Introduce a Canadian Business Experience Program

In 2013 my friend and colleague Jeffrey Lowe developed the concept of the Business Experience Class (BEC). Following upon the establishment of the Canadian Experience Class (CEC) in 2008, he opined that allowing business persons to establish in Canada to bring their entrepreneurial talents, experience and financial resources would ultimately be to Canada’s benefit. The premise was straightforward – allow business applicants to come to Canada on a 2–3-year work permit to establish a business and hire Canadians. After a defined period of time, say 24 – 36 months, applicants could apply for permanent residence demonstrating that they had set up operations, employed Canadians, and paid employee deductions and taxes as well as their own corporate and personal taxes. Work permits could be renewed as necessary until permanent residence was obtained.

The creation of a BEC should allow business persons speedy entry to Canada on a work permit to invest in and establish a business, create jobs for Canadians and stimulate the Canadian economy. However, there needs to be a corresponding path to permanent residence that is reflective of the business persons’ reality. The criteria for permanent residence in the BEC should be based on economic contribution, stimulus and job creation rather than the standard Express Entry criteria of age, education, and language proficiency and work experience.

Time is Money

One of the challenges in all of Canada’s various business immigration programs – federal, provincial and territorial – is that they are not speedy. That needs to change. The inherent suspicion of business immigrants needs to be put to rest. If the SUV program can entertain applicants who it is anticipated may fail, why should that be any different for any other prospective business applicant who is prepared to bring their own financial resources to Canada and make a go of things? In both the proposed Investor program and the BEC class, the issuance of the temporary visa should be a matter of weeks and not months let alone years. Business people don’t tend to sit around and wait. If things don’t work out here, they will pack up and go home to familiar territory. Lost time is lost opportunity.

Conclusion

After being the leader on the world’s business immigration stage in 1986, Canada essentially bowed out in 2014 and in doing so has left the global marketplace for others to reap the rewards. This should change. Canada offers the same potential benefits to the world’s investors and entrepreneurs that it does to all other economic immigrants – a stable political environment, a strong economy, a well-established social network, and unparalleled natural beauty. As the current figures for pending SUV applications indicate, the number of individuals with the business acumen, financial ability and desire to establish themselves in Canada are considerable. It is Canada who is missing out on the opportunities that business immigration can bring to her. In the aftermath of Covid-19, that should change and soon.

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Sas and Ing Immigration Law Centre LLP

A partnership between Catherine Sas Law Corporation and Victor Ing Law Corporation

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About the Author