M&A & exit
Continuance
Moving a corporation's jurisdiction of incorporation from one jurisdiction to another.
Definition
Continuance is the statutory process by which a corporation moves its jurisdiction of incorporation from one jurisdiction to another (e.g., from Ontario to federal CBCA, or from CBCA to Delaware). Under CBCA s. 187 (export) and s. 188 (import), a corporation can continue out of Canada to a foreign jurisdiction or in to the CBCA. The corporation retains its legal identity, contracts, and obligations — only the governing corporate statute changes. Sometimes called 're-domicile' or 'domestication' (in US contexts).
Same concept, different references
| Canada (CBCA) | Continuance, s. 187 (export), s. 188 (import) |
|---|---|
| Ontario (OBCA) | Continuance, s. 181 |
| Quebec (LSA-Qc) | Continuation, art. 297-301 |
| Delaware (DGCL) | Domestication, § 388 (foreign corporations becoming Delaware) |
Common reasons to continue
Continuance is used for strategic and operational reasons:
- Tax optimization: moving to a more favorable tax jurisdiction (rare in CCPC context; common in cross-border IPO preparation)
- Governance flexibility: CBCA offers flexibility unavailable in some provincial jurisdictions; Delaware offers different protections for board action
- IPO preparation: aligning the corporation's jurisdiction with the intended listing venue (Canadian listing → Canadian incorporation; US listing → US incorporation)
- Acquisition preparation: matching the buyer's jurisdiction can simplify post-close integration
- Reduce overhead: collapsing multi-jurisdictional groups into a single home jurisdiction
Process for continuance into the CBCA (import)
Under CBCA s. 188, a foreign corporation continues into Canada with these steps:
- Authorizing resolution: shareholders of the original corporation authorize the continuance by special resolution (66 2/3% in most jurisdictions)
- Original jurisdiction approval: many jurisdictions require government approval for export (departure)
- Articles of continuance: filed with Corporations Canada, attaching evidence of the original jurisdiction's approval
- Certificate of continuance: issued by Corporations Canada; the corporation continues with the CBCA governing it
- Effective date: continuance is effective from the certificate date; the corporation's prior history continues unbroken
Tax considerations
Continuance has tax consequences that depend on whether the corporation is moving in to or out of Canada:
- Out of Canada (export): generally triggers a deemed disposition of all assets at fair market value, with associated tax consequences. Section 219 ITA applies to emigrating corporations.
- Into Canada (import): usually tax-neutral for the corporation itself, but shareholders may face deemed disposition events depending on circumstances.
- Intra-Canada continuance (e.g., Ontario to CBCA): generally tax-neutral; the corporation continues its tax history under the new governing statute.
In Octelligence
Continuance reflected across your records.
When a corporation continues from one jurisdiction to another, its share register, certificates, and minute book must reflect the new governing statute. Octelligence supports the continuance event in the corporate record, with proper documentation of the original and new jurisdictions.
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