Transferring a Chief Operating Officer from China to Canada to open a new office (C61 Work Permit)

THE CHALLENGE

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The challenge was to prove the qualifying relationship between the Canadian and Chinese companies, as required for the C61 Work Permit. This involved demonstrating that control through a Variable Interest Entity (VIE) legal structure, rather than typical equity ownership, would still meet the requirements for a qualified corporate structure under the C61 LMIA exemption code for intra-company transfers.

Our client, the Chief Operating Officer of the Chinese company, was required to be in Canada to set up the new office. De facto, the Chinese and Canadian businesses were affiliates, as both were controlled by the same third business entity. The Chinese company operated in a highly regulated industry and, therefore, could not be simply owned through equity by the foreign company or investor due to Chinese domestic regulations and protections. As a result, the Chinese company (the sending enterprise) was controlled by the foreign investor via a Variable Interest Entity (VIE) legal structure. The same foreign company owned and controlled the Canadian company (the receiving enterprise) through equity.

“Still, the Chinese company was de facto controlled by the foreign 'parent' company through a VIE legal structure, despite not being directly owned.”

The Chinese company operated in the SaaS sector, had fifty-seven employees, proved its business concept and achieved about a million dollars in sales within just a few years of its launch, thanks to the unique service it provided. These factors all contributed to securing significant investment to establish a Canadian company, which was intended to become the North American headquarters. The Chief Operating Officer (COO) was uniquely qualified and tasked with setting up the Canadian operations. Both the Canadian and Chinese companies were part of a multinational corporate structure involved in the same business. However, their affiliation could not be proven through direct ownership, as de jure, there were dozens of contractual arrangements governing this corporate relationship. De facto, the Chinese company was controlled by the same 'parent' company as the Canadian enterprise, although it was not directly owned.

THE SOLUTION

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We advised our client on the following:

• The importance of proving the qualifying relationship between the sending and receiving enterprises as one of the criteria for using the C61 LMIA exemption code to obtain an intra-corporate transfer work permit for a senior executive tasked with setting up a startup affiliate in Canada.
• Given the non-standard corporate structure, which does not directly fall within Canada’s immigration provisions for this type of work permit, the need to provide evidence in the form of contracts proving corporate control, as well as the relevant Chinese legislative background.
• The necessity of drafting detailed legal submissions explaining the unique structure, with reliance on evidence proving control via the VIE structure. These submissions also highlighted why this is the only viable solution for companies of this type in China, referencing the current legislation and requesting special consideration, as the arrangement effectively meets the requirements for an intra-corporate transfer work permit.
• The importance of addressing the other criteria under the C61 LMIA exemption code following the change from the C12 LMIA exemption code for this type of work permit.

THE RESULT

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Our client successfully obtained a one-year C61 Intra-Company Transfer Work Permit to launch a new Canadian affiliate of the Chinese company.

We assisted our client by applying for a work permit exempt from a Labour Market Impact Assessment under the C61 administrative exemption code. We also helped our client obtain an open work permit for their spouse and a visitor record for their minor child, who accompanied them during the work assignment in Canada. IRCC approved these applications within 8 weeks (59 days) from the submission date.

“The transferee successfully launched the startup Canadian affiliate company utilizing the C61 Work Permit.”

The application was submitted with full disclosure of all "problematic areas," which were competently addressed in a counsel's submission letter with reference to substantial evidence that accompanied the application. When handling cases that are not straightforward, our top priority is to disclose and address all issues to ensure our clients' long-term success and peace of mind.