In Canada on temp work visa, Want to apply for startup visa

[mysticdaisy]

I seem to be caught in a catch 22 situation, or else one of more of the sources I'm reading is wrong.

1) I am here on a work visa right now for a job unrelated to any startup / entrepeneurship, which is ending in about 5 months.

2) I have started to work on a startup business with a Canadian co-founder. I have no work visa for it, but I have not yet received a single dime or any stock or anything (we haven't actually even made any income at all from the "business"), and the business is not incorporated yet, so I believe this is legal so far.

3) I want to apply for a startup visa so I can legally start making money from this. The requirements say, though, that applicants need to have 10% voting power in the business, and an angel investor already, which we will be able to do, but obviously this means the company has to be incorporated already BEFORE I apply for a startup visa.

My main problem is I can't seem to confirm whether I am able to legally incorporate a business or own shares in a private business while I'm here on a work visa, when that business is not the one listed on the work visa (since, of course, we are starting it from scratch)?? Some places say yes, some places say no.

One of my cofounders is a full Canadian citizen, but I'm still not sure if I can legally start a business with him while I'm here on a work visa? Would that still be considered illegally getting compensation for work outside of my work visa?? (even if I don't get any salary, do the founders' SHARES count as compensated illegal work outside of my visa?)

 

[mysticdaisy]

Oh and I am a US citizen if that matters.

 

[scylla]

What kind of work permit do you hold now? You should be aware that you most likely can't work on your start up at all (even if you're not being paid and even if you're not making money). If you are on a closed work permit, working on your start up in any capacity is illegal work and a violation of your status in Canada. If you are here on an open work permit, then it's OK.

 

[mysticdaisy]

Hi, I am on a closed work permit. However, I looked up the definition of disallowed work before I put any effort into this startup, and it says (from CIC):

“Work” is defined in the Regulations as an activity for which wages are paid or commission is earned, or that competes directly with activities of Canadian citizens or permanent residents in the Canadian labour market.

Wages paid / commission earned: no

Competes with Canadian citizens' labor: No, because the majority of the effort was in crafting a business plan that fills a niche that doesn't exist yet in other companies at all (it's a brand new software concept, not a dry cleaners or something).

Am I missing something that would otherwise qualify this as "work" such that it would be illegal?

------------------

Also, if it is/were illegal to do any work on a startup, then how does the startup visa make sense? Who is it for? How can anybody ever apply for it, if you can't work on it beforehand, yet they require you to have angel investors already (AKA have worked on it a lot) before applying?

An open work permit might make sense, but as far as I can tell, those are for people who already applied for permanent residence by another channel, and if so, what would be the purpose of bothering to apply for a startup visa, since it does nothing but give you permanent residence, which you already had to apply for in some other way to get the open work permit that you needed to apply for the startup visa? It would be redundant at that point.

Very confused (and thank you for responding)

 

[scylla]

The answer to the second question (competes with Canadian citizens' labor) is yes. That's where your misunderstanding is. The work you're engaging in is illegal - even though it's unpaid. You can certainly contribute money towards a start up - but that's it. You cannot do any work for that start up of any kind.

Yes - open work permits are only available to specific people in specific circumstances (e.g. you have completed a degree in Canada as an international student).

You have a couple of misconceptions about the start up visa. The start up visa is an immigration program - not a temporary work permit. It's for people who have a business idea but haven't started a business yet and are able to secure investors. Once PR is granted, the applicant can then come to Canada and start their business (they don't set up the business in advance of becoming a PR - they set it up after they have PR and have arrived in Canada).

 

[mysticdaisy]

What Canadians exactly am I "competing" with when I have no actual existing company, no customers, no services rendered, no employees hired, and no revenue? The company WOULD need some of those things in the future prior to applying in order to fit the requirements of the startup visa (hence the thread asking this question for how one might go about doing that without stepping over the line and getting caught in a causal loop), but so far, how does having planned out the business alone plausibly compete with anyone?

It's for people who have a business idea but haven't started a business yet and are able to secure investors.

It cannot be for people who haven't started a business yet, because one of the written requirements for the startup visa is "Each applicant must hold 10% of voting rights in the business"

(above is quoted from CIC, won't let me post the link)

That qualifying requirement is logically impossible for a business that hasn't been started yet (it's also pretty much unheard of for any angel investor to invest in a non-incorporated business, though unlike the ownership requirement isn't strictly logically impossible)). So there must be SOME way to start a Canadian business as a non-citizen, non-permanent resident legally prior to applying. I just can't figure out what that way would be.

 

[canuck_in_uk]

What Canadians exactly am I "competing" with when I have no actual existing company, no customers, no services rendered, no employees hired, and no revenue?

That qualifying requirement is logically impossible for a business that hasn't been started yet (it's also pretty much unheard of for any angel investor to invest in a non-incorporated business, though unlike the ownership requirement isn't strictly logically impossible)). So there must be SOME way to start a Canadian business as a non-citizen, non-permanent resident legally prior to applying. I just can't figure out what that way would be.

You are competing with the Canadians who would have otherwise been working on the start-up instead of you.

From what I've see, people are either on open work permit or are outside of Canada contributing to the start-up.

 

[mysticdaisy]

Just an update for anybody in the same situation in the future: I spoke to a lawyer about this, and she told me I should be fine on legality, so long as I stop doing any day to day business for the startup as of if/when customers are acquired (paying or not). However, setting up/designing a business that has no customers yet as I've been doing was fine. I am also apparently allowed to continue to do some things even when the company has customers, including meeting with investors / applying for grants, etc. (overall strategy things, but no day to day operations). You can also legally incorporate if you have a Canadian cofounder, though it may have repercussions for certain immigration channels you may otherwise have chosen.

You are competing with the Canadians who would have otherwise been working on the start-up instead of you.

Nobody would be working on the startup, it wouldn't exist if not for me, because it was my idea. So no such people exist.

However, when there are customers, it begins to plausibly compete with other companies for those customers, as expected.

 

[h1b2pr]

Following. Please keep posting about your approach with Startup visa.
Did you get any investor or joined any incubator program yet?

 

[parkjy]

Interesting problem. Below is my answer, but I first begin with a disclaimer that I am no lawyer and you should consult your own before you take action from what is below.

Foreigners are allowed to hold shares in Canadian corporations - whether they are CCPCs or not. The only change that would result in the legal entity itself if you and/or any orher foreign individual takes more than majority of economic ownership or voting shares of the business would be that the legal entity would no longer be a CCPC, presenting disadvantages for tax purposes and SRED.

However, from what you quote below, work must be paid in wages or commissions, or you must directly compete with those in the labour market - meaning that your startup or your role in the startup will not compete in the labour market where you compete for positions with paid monetary wages and commissions.

Happy to share thoughts further!

I seem to be caught in a catch 22 situation, or else one of more of the sources I'm reading is wrong.

1) I am here on a work visa right now for a job unrelated to any startup / entrepeneurship, which is ending in about 5 months.

2) I have started to work on a startup business with a Canadian co-founder. I have no work visa for it, but I have not yet received a single dime or any stock or anything (we haven't actually even made any income at all from the "business"), and the business is not incorporated yet, so I believe this is legal so far.

3) I want to apply for a startup visa so I can legally start making money from this. The requirements say, though, that applicants need to have 10% voting power in the business, and an angel investor already, which we will be able to do, but obviously this means the company has to be incorporated already BEFORE I apply for a startup visa.

My main problem is I can't seem to confirm whether I am able to legally incorporate a business or own shares in a private business while I'm here on a work visa, when that business is not the one listed on the work visa (since, of course, we are starting it from scratch)?? Some places say yes, some places say no.

One of my cofounders is a full Canadian citizen, but I'm still not sure if I can legally start a business with him while I'm here on a work visa? Would that still be considered illegally getting compensation for work outside of my work visa?? (even if I don't get any salary, do the founders' SHARES count as compensated illegal work outside of my visa?)

 

[mysticdaisy]

"Please keep posting about your approach with Startup visa."

I gave up on the startup visa after looking up its history and discovering that a completely absurd FIVE of those visas had ever been issued in like 2 years since it was introduced, and also due to the continuing inherently impossible catch-22s involved in it (probably why 5 have been issued...)

I am simply applying under canadian experience class instead, which does not require any job offer as long as you have enough points without one (which I do), so it can work for a startup without the startup needing to be big enough to give job offers or without me having to have been illegally too involved with it (i.e. acting like an employee not just an investor).

It seems both faster and infinitely simpler with canadian experience class. Though it wouldn't work for everybody, I just happened to have had a standard job for 2 years already as well here.