Legal Forms of Foreign Entities Doing Business in Canada and China: Comparative Overview

When investing or conducting business in Canada, the first step is to determine the appropriate legal structure for the business entity. Under Canadian law, common forms include corporations, partnerships, and joint ventures. Among these, the corporate structure remains the most popular choice for foreign investors. Alternatively, foreign entities may establish a branch or representative office. In practice, many foreign banks and financial institutions enter the Canadian market via branch operations.

Regardless of the chosen structure, tax registration and business licensing are mandatory. Procedures vary depending on the legal form and the province of operation. As a federal state, Canada’s business activities are governed by both federal and provincial laws. In most cases, provincial legislation plays a more significant role, particularly in areas such as property and civil rights, contract law, labour relations, occupational health and safety, consumer protection, real estate, land use, municipal governance, securities regulation, and professional licensing.

In China, foreign investors have access to similar legal structures, including representative offices, companies, and partnerships. Foreign-invested enterprises generally enjoy national treatment under Chinese law. The previous classifications—wholly foreign-owned enterprises, equity joint ventures, and cooperative joint ventures—have been abolished as part of efforts to streamline the foreign investment approval process. However, China continues to maintain a “negative list” restricting foreign investment in certain sectors. Some industries also impose minimum registered capital requirements (e.g., RMB 2 million for labour dispatch agencies).

Compared to China, starting a business in Canada is generally more straightforward for foreign entities. Canadian corporate law does not mandate a minimum share capital (analogous to China’s registered capital) nor does it impose restrictions on loans from foreign shareholders (similar to China’s foreign debt quota).