Business Requirements for Intra-Company Transferee (ICT)

Priya, the Chief Operations Officer of a successful tech firm in India, faces a unique opportunity. Her company, which has a subsidiary in Canada, wants to transfer her there. However, they have never transferred any employees internationally before. Moreover, IRCC recently updated its rules for Intra-Company Transferee permits, including business requirements. Therefore, the company needed to ensure it met the new business requirements. Priya wondered if her company could qualify under the new ICT regulations.

Overview of Intra-Company Transferee Work Permits

Intra-company transferee (ICT) work permits allow multinational companies to transfer key employees to their Canadian businesses. There are two distinct types of ICT permits, each governed by different sections of the Immigration and Refugee Protection Regulations (IRPR):

• R204(a): For companies that can transfer employees based on Free Trade Agreements (FTAs), such as the Canada-United States-Mexico Agreement (CUSMA). These permits are subject to the terms of the specific trade agreement between Canada and the employee’s country.
• R205(a): For companies from countries not covered by an FTA. These permits apply to all other countries and are issued based on the transfer’s significant economic, social, or cultural benefit to Canada.

This article focuses on R205(a) permits, which cover countries outside Canada’s trade agreements. Businesses seeking to transfer executives, managers, or specialized knowledge workers must meet specific business requirements under this category. If you are unsure about your company’s eligibility or whether you fall under an FTA, booking a consultation can help clarify your options.

Understanding Intra-Company Transferee Exemption Codes: C61, C62, and C63

The ICT program, under exemption codes C61, C62, and C63, facilitates the temporary transfer of key employees from foreign enterprises to their Canadian businesses. These exemptions fall under R205(a) and are part of the International Mobility Program. Using these codes, the Canadian employer does not need an LMIA letter to support the foreign national’s employment. The focus is on benefiting Canada economically and socially while allowing businesses to move specialized workers, managers, and executives. Below are brief explanations of each code and how they differ.

C61: Establishing a New Enterprise in Canada

C61 applies to employees transferred to establish a new branch, subsidiary, or affiliate in Canada. This exemption is limited to managerial or specialized knowledge employees who help set up a new business. However, the foreign company must already operate in at least two countries. This permit is generally valid for up to one year and cannot be extended without extenuating circumstances.

C62: Executives and Managers of Existing Businesses

C62 is designed for executives or senior managers of multinational corporations being transferred to existing Canadian operations. The Canadian business must be large enough to justify the need for such roles. Moreover, this exemption allows for an initial three-year work permit, renewable for up to seven years.

C63: Specialized Knowledge Workers

C63 targets employees with advanced proprietary knowledge of the company’s products, services, or processes. The focus here is on transferring highly skilled individuals whose knowledge is critical to the Canadian business. The work permit under C63 can be issued for up to three years, with possible renewals, but the total stay cannot exceed five years.

These three codes reflect different business needs, whether starting new operations or enhancing existing ones. Each has its own set of rules for transferring employees, so businesses must choose the right category to meet their needs.

Key Terms for Intra-Company Transferee Work Permits

Before understanding the business requirements for ICT work permits, it’s essential to clarify some key terms. These definitions form the foundation of the qualifying relationships required for the program.

Multinational Corporation (MNC)

A multinational corporation (MNC) is a company that operates in at least one country other than its home country. It must have active, revenue-generating operations in its home country and at least one foreign country. However, the MNC cannot rely on the ICT program to establish its first foreign operation in Canada. The foreign enterprise must already be an MNC with operations in at least two countries, including its home country, before seeking to transfer employees to Canada. This last rule only applies to C61 applicants. Please read the rest of the article for more information.

For an MNC to qualify under the ICT program, the Canadian and foreign entities must maintain a qualifying relationship. These relationships include parent, branch, subsidiary, or affiliate business structures. Ownership and control are critical factors in establishing such a relationship.

Ownership means having the right of possession, including full power and authority to control the entity. Control, on the other hand, refers to the right and authority to direct the enterprise’s management and operations. Both ownership and control must exist between a foreign and a Canadian business to establish a valid ICT relationship.

The Canadian and foreign enterprises must also be recognized as legal entities, meaning they are formally constituted or organized under applicable law. These entities can be privately owned or government-owned, including corporations, partnerships, sole proprietorships, or even non-profit organizations. Moreover, non-profit organizations may qualify if they demonstrate a parent-subsidiary, branch, or affiliate relationship. Whether an enterprise is commercial or non-profit, the qualifying relationship remains the same.

Moreover, the multinational corporation must demonstrate that it engages in revenue-generating activities in its home and foreign countries. It cannot qualify as an MNC under the ICT program if it only has a presence without active business operations. Therefore, the MNC must show that it generates revenue beyond its borders before seeking to transfer employees to Canada.

Therefore, to transfer employees through the ICT program, the MNC must already have an international presence with proven cross-border operations and controls.

Parent Company

A parent company owns one or more subsidiary companies and controls management and decision-making across its subsidiaries. In the context of the ICT program, the parent company may be in Canada or a foreign country.

Subsidiary

A subsidiary is a separate legal entity that the parent company owns and controls. Typically, the parent company owns more than 50% of the subsidiary’s shares, thereby granting it control over the subsidiary’s management and operations. However, the parent company may also control the subsidiary through legal agreements, even if it holds less than 50% of the shares. In the context of ICT transfers, the Canadian business may act as a subsidiary of a foreign parent company. Nonetheless, a Canadian parent company can also transfer employees to a foreign subsidiary.

Affiliate

An affiliate refers to two entities owned and controlled by the same parent company or group of individuals. The key factor in defining an affiliate relationship is shared ownership and control. Unlike a subsidiary, an affiliate is not necessarily majority-owned by another company but shares a common owner with its counterpart. Both foreign and Canadian businesses must show this shared control for the ICT program.

Branch

A branch is an extension of the parent company. It operates under the same legal entity but in a different location. Unlike subsidiaries or affiliates, branches do not exist as separate legal entities. Instead, they function as part of the main company but manage different regions or markets. For ICT purposes, a branch in Canada must be directly linked to the foreign enterprise and share control and management.

C61: Establishing New Enterprises in Canada

As I mentioned earlier, there are sensitivities surrounding new businesses in Canada. Therefore, IRCC scrutinizes IMP C61, applicants. Consider the following paragraphs on business requirements.

Multinational Corporation (MNC) Definition for C61

To qualify under exemption code C61, the foreign company must already be a multinational corporation (MNC). This means the company must have active business operations in at least two countries, including its home country. However, being in another country does not qualify a company as an MNC. It must demonstrate active revenue generation in those countries. Moreover, businesses seeking to establish their first foreign entity in Canada cannot use the ICT program under C61 to achieve this. They must meet the MNC definition before initiating employee transfers to Canada.

Revenue-Generating Operations Requirement for C61

A crucial requirement for C61 is that the foreign company must be engaged in revenue-generating operations outside its home country. The MNC must demonstrate active business operations in at least one country other than Canada. The company’s Canadian presence must also transition into active business within one year of establishment. The company cannot use C61 to create an inactive branch or a shell entity. Therefore, the firms must demonstrate an ongoing capacity to generate revenue to ensure the new Canadian enterprise will be fully operational within the first year.

Owners Cannot Transfer Themselves Under C61.

Foreign nationals who own a business cannot transfer themselves under the ICT category unless the foreign company qualifies as a multinational corporation (MNC). If the foreign business is not an MNC, the owner is not eligible for the ICT program to establish a new enterprise in Canada. However, if the foreign company meets the definition of an MNC, it may transfer employees to help set up the Canadian business. In cases where the industry is not an MNC, the owner might qualify under the Business Owner – Temporary Purpose (C11) category instead. Therefore, business owners must carefully assess their company’s qualifications before applying to the ICT program.

Impact of Mergers and Acquisitions on ICT Work Permits

Mergers and acquisitions can significantly affect ICT work permits, especially when business ownership or structure changes. However, the key concern is whether a qualifying relationship between the foreign and Canadian businesses remains intact. If the parent, subsidiary, branch, or affiliate relationships continue, the ICT employees can usually stay under their current work permit.

The foreign national must prove that foreign and Canadian businesses still exist and operate. Moreover, the ICT transferee must demonstrate that their role in Canada remains temporary, with the ability to return to their home enterprise after completing their assignment.

However, if the merger or acquisition eliminates the qualifying relationship, the ICT employee must apply for a new work permit. This ensures compliance with Canadian immigration regulations. Nonetheless, if the relationship survives the restructuring, the ICT employee can continue working for the new owner without reapplying. For official advice on this matter, book a consultation session.

For new work permit applications in the context of mergers or acquisitions, the employee must have worked for the acquired business for at least one year within the past three years. The acquiring company must also demonstrate that it has assumed the interests and obligations of the original business. Moreover, the new owner must continue operating the same type of business as before the acquisition.

Therefore, ICT employees and employers must closely monitor business changes to ensure compliance with Canadian immigration laws. When relationships change, consulting an immigration expert can clarify the next steps.

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