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Open a SPV in Canada

Open a SPV in Canada

A special purpose vehicle (SPV) defines a type of company that is created, as its name suggests, for a specific, limited purpose. Investors who want to open a SPV in Canada may set it up for the financing of a project, for the acquisition of a project or for securitization purposes.

The main advantage investors can obtain when opting to operate through a SPV is that they will separate a part of the company’s assets, thus limiting the risks associated with the respective project. Our consultants in company formation in Canada can help businessmen set up an SPV company.

What are the characteristics of a SPV in Canada?

The SPV company in Canada is incorporated as a separate legal entity that the company/investor that wants to open a business for a specific investment purpose. The SPV has its own legal personality and its own assets, and it is separate from the parent company in tax and accounting matters. The entity is also treated as a separate structure for insolvency purposes.

The SPV company in Canada also does not have debts or other pre-existing liabilities and the types of activities in which it can engage are limited. Our consultants can help you set up a business in Canada under this structure and can offer advice on the legislation applicable to it.

What types of securities can the SPV company in Canada own?

As presented above, the SPV can be used as a vehicle for securitization purposes. In Canada, asset securitization can be done through asset-backed securities (ABS). ABS refer to the assets that are sold to the SPV by the lender company (known as the originator) and which are later pooled by the SPV (the issuer) for the purpose of being sold to various investors.

In Canada, there are 2 main types of ABS – the publicly issued ABS and the privately issued ABS. While the first are issued with a prospectus, the latter do not need this document. Our consultants in company incorporation in Canada can provide more details on the provisions included in the prospectus of the SPV company.

Legislation on ABS in Canada

Investors who want to open a company in Canada should know that the legislation for the registration and the functioning of a business is regulated at a federal (national) and provincial level. The same is true for those who want to open a SPV in Canada. ABS is mainly regulated at a provincial level, as the country does not have a unified legislation, applicable at a federal level, for ABS and securitization.

In order to open a SPV in Canada, investors must follow the rules of the law on financial institutions, as well as the legislation on anti-money laundering laws and the insolvency laws. The institutions regulating the activities of SPVs also very based on the location.

For instance, those who will set up a company in Canada in the province of Ontario must follow the rules of the Ontario Securities Commission, while those registering in British Columbia must observe the rules of the British Columbia Securities Commission.

Legal entities for Canadian SPVs

Foreign investors who will open a SPV in Canada can opt for 3 legal entities for the incorporation, as follows: the trust, the limited partnership or the corporation. For each, there are different incorporation requirements, and different tax and reporting obligations, which can be detailed by our accountants in Canada.

For the registration of a business form, investors must also pay registration fees, which vary based on the province chosen for incorporation. Below, you can discover some of the registration costs:

  • in British Columbia or in Ontario, the registration fee is CAD 350;
  • in Alberta, the fee is CAD 450;
  • in Quebec, the fee is CAD 356;
  • in Nova Scotia, it costs CAD 200;
  • to these, you must also calculate the fees for name approval, which can vary from CAD 30 to CAD 300.

We invite you to contact our consultants for more details on the registration of the SPV company. You can also address us if you need information on other business-related matters, such as steps to participate in the Owner Operator program in Canada or the intra-company transfer in Canada.