Canada has a robust and efficient immigration system with numerous federal and provincial immigration programs for skilled works. And it’s Owner-Operator LMIA Work Permit for Foreign Entrepreneurs. However, there are very few federal programs for foreign entrepreneurs and investors seeking to set up a new business or buy an existing business in Canada.
The federal program for self-employed immigrants is a niche program aimed more at athletes and cultural performers. The Federal Startup Visa program makes it compulsory for the entrepreneur to partner and work with designated organizations.
If federal programs don’t match your requirements and if PNP two-step Entrepreneur streams are too slow or too complicated for your business plans, then you can explore the Owner-Operator LMIA Work Permit route to setup and run a business in Canada.
About the Owner-Operator LMIA Work Permit
The owner-operator work permit route is a two-step program where an initial work permit serves as the platform to become a permanent resident of Canada. The Owner-Operator LMIA route involves the following steps.
- Buy an existing Canadian business or setup up a new business in Canada.
- Create a job position for yourself as an employee of the business and apply for the Owner-Operator LMIA
- Get a work permit and start working for your own business as its employee
- Apply through Express Entry and become a permanent resident of Canada.
Qualifying as an Owner-Operator
The owner-operator route is not open to every foreigner interested in investing in a business in Canada. To qualify as an owner/operator, you must fulfill important requirements related to business control and benefit to Canada through job creation or skill transfer.
You must have controlling interest in the business for which you wish to become an owner-operator. This means you must either be the sole owner or have a majority equity stake if the business is a partnership or company.
The simplest indicator of business control is whether you can be fired from your position in the business. If you have control of the business, then this obviously won’t be possible.
Benefit to Canada—Job Creation or Skill Transfer
Merely buying a business and appointing yourself as its employee won’t qualify you as an owner-operator. A very important parameter is whether your presence in Canada and participation in the business will create or retain jobs for Canadians or result in transfer of skills or knowledge to Canadians.
Active Participation in Management of the Business
The owner-operator work permit differs from a passive investment immigration program because the applicant must actively participate in the management of the business.
You must have a strong business experience and have a good track record of creating and sustaining successful businesses. You must create a detailed business plan for the business and must play a key role in executing it in Canada.
Authorities will also analyze your business plan to assess its viability and to verify your business expertise and the extent of control you have over the business or venture to assess whether you fulfill the requirement of actively managing the busines.
Since you will be entering Canada as a skilled worker under the Temporary Foreign Worker Program, your employer i.e. your business will have to apply for a Labor Market Impact Assessment. Your appointment as an owner-operator worker can proceed only if you get an approval LMIA.
The factors considered by the authorities during LMIA assessment will differ depending on whether you are acquiring an existing business or setting up a new business.
Buying an Existing Business
If you are buying 100 percent stake in the business and shall be its sole owner, then LMIA assessment will depend on how you will create and retain jobs for Canadians and extent of knowledge transfer through transition plans.
If the completion of the purchase is contingent on your LMIA and work permit, then you can prove your intent by finalizing share purchase agreements and setting up escrow accounts for the purchase of the business.
In this scenario, you can complete the purchase and then apply for the LMIA or the existing owner can apply for the LMIA, appoint you, and then finalize the sale of the business.
In case of a partnership or a partial stake purchase, authorities will consider the following factors before granting LMIA approval.
- Whether you shall have majority stake in the business?
- Whether your appointment as employee can be terminated without your consent/agreement.
- Extent to which existing shareholders will continue to play an active role in the management of the business.
- Whether business is profitable enough to pay the salary of the investor-employee without considering the additional capital brought in by the investor-employee.
- The responsibilities and duties that the investor-employee will take on after being appointed in the position.
In this case too, the existing owner will hire you and apply for the LMIA for your position.
Setting up a New Businesses
Fulfilling the ‘active engagement in the management of the business’ can be difficult when setting up a new business in Canada. You can prove this when applying for LMIA and work permit by highlighting your role in various tasks related to the establishment of the business.
These can include:
- Negotiating various contracts related to setting up of the business, including lease agreement for the premises, contracts for equipment, appointment of other workers, etc.
- Applying for Business Number (BN) registration with the Canada Revenue Agency and completing other regulatory formalities, licenses, and permits for establishing a business
- Creating a detailed business plan that showcases your understanding of the business and your involvement in the planning process of establishment of the venture.
Owner-Operator LMIA is exempt from advertising requirements applicable to all other LMIA applications. Apart from the various factors detailed above, authorities shall also consider your proficiency in English and/or French.
Ideally, you should undertake a valid language test and score at least CLB 5.0 or higher in the four components to avoid complications in getting a positive LMIA.
After LMIA Approval
The procedure for getting a work permit after approval of the LMIA is the same as for any other applicant under the Temporary Foreign Worker Program.
Once your work permit is approved, you can start working for your business and start planning for permanent residence just like any other skilled worker.
You can create your Express Entry profile and apply through the Federal Skilled Worker Program (FSWP). With a job offer from your own business in hand, you can easily qualify for the 200 points available for EE applicants with a full-time job offer from a Canadian employer and quickly receive an ITA.
Or, you can choose a PNP stream for skilled workers and get the 600 points boost from provincial nomination and qualify for the ITA for permanent residence.
Owner-Operator vs PNP Entrepreneur Streams
The Owner-Operator LMIA work permit route offers some significant advantages as compared to applying through entrepreneur streams of provincial nomination programs.
The Owner-Operator LMIA is processed through the Federal program for temporary foreign workers. Further, you can apply for PR through the Federal route, which means you are free to settle in any province of your choice.
A PNP applicant will have to necessarily settle in that specific province regardless of whether there are better opportunities in other provinces.
Secondly, Entrepreneur streams impose minimum net worth and investment requirements. The Owner-Operator route allows you to invest as much as you can and helps you qualify for PR even if you don’t have a big net worth.
Finally, applying through PNP streams is a lot more complicated as compared to the Owner-Operator route.
You will first have to submit an Expression of Interest, make preparatory research trips to the province, finalize a Business Performance Agreement after receiving an ITA, deploy your investment, and work on a work permit for 18-36 months before becoming eligible for permanent residence.
The owner-operator LMIA work permit is easier and gives you a fair shot at becoming a permanent resident within a year of finalizing your decision to do business in Canada.